Local utility company Consolidated Water may be selling its operations in Belize due in major part to difficulties the company has experienced in repatriating profits from there, according to filings with the United States Securities and Exchange Commission.

Consolidated Water – which is headquartered in Cayman and also operates in Belize, the British Virgin Islands, the Bahamas and Indonesia – has explained in public filings that repatriating profits requires the approval of the Central Bank of Belize, and is dependent on the amount of U.S. dollars available to Belize banks to execute such transfers.

“Weakness in the Belize economy and other factors have reduced the amount of U.S. dollars that Belize banks have available for transfer, which has limited the amount of funds we are presently able to transfer from CW-Belize,” Consolidated Water explained in its second-quarter report for this year. “Our repatriations of funds from CW-Belize to our parent company amounted to $458,000 and $400,000 for the years ended Dec. 31, 2017 and 2016, respectively, significantly less than the net income and net cash flows CW-Belize generated for those years.”

The difficulties in repatriating profits from Belize have apparently reached a tipping point for Consolidated Water, as the company has entered a non-binding memorandum of understanding with Belize Water Services Ltd. to sell all of its shares – under the condition that Belize Water Services helps facilitate the conversion to U.S. dollars so that Consolidated Water can repatriate all the cash it holds in that country.

Because of this agreement, Consolidated Water has been able to repatriate US$2.75 million in cash from Belize to its bank accounts in the Cayman Islands over the past three months, representing a marked increase in the amount of cash that the company has been able to transfer from its accounts in Belize in recent years, according to Consolidated Water CEO Rick McTaggart.

While the transaction between Consolidated Water and Belize Water Services has not been finalized, it appears to be getting closer to that point. An Oct. 1 report from Channel 5 Belize states that the country’s government has approved a sovereign guaranty for a proposed loan from the Caribbean Development Bank of $17 million Belize dollars (US$8.5 million) to, among other things, acquire all the shares of Consolidated Water’s Belize operations.

Mr. McTaggart stated that in the event that the transaction is completed, Consolidated Water plans to use the proceeds to fund organic growth projects in its other existing markets, as well as new projects and potential acquisitions in new and developing markets.