Debt-ridden general contractor Pro-Active Management Systems Ltd. is likely to stay in control of the new secondary school development after mystery benefactors stepped in to pay off their mounting arrears, The Royal Gazette has learned.

Many of the sub-contractors who are owed thousands of dollars by Pro-Active for supplies and work carried out on the new Berkeley Institute site have been told they will be paid up to date by next Tuesday.

Works Minister Alex Scott said yesterday that people in Bermuda had stepped forward to help out the troubled general contractor, which only last week was believed to be in financial trouble.

But he refused to name who they were, and The Royal Gazette could not reach Pro-Active president Arthur Ebbin yesterday.

The $68 million project has almost come to a standstill during the last week as many sub-contractors refused to return to the site until accounts were settled, with two, BCM McAlpine and Blumber's Crane and Steel Services, filing writs against Pro-Active in the last couple of days.

Somers Construction was rumoured to be taking over the running of the site, with Pro-Active staying on in a subsidiary role.

However Mr. Scott said yesterday that provided the debts were paid off, he could see no reason why Pro-Active should not be allowed to finish the job it started.

"We were given an undertaking that the debts would be paid by next Tuesday, maybe before," said Mr. Scott.

"We (Government) are not paying them off and we are not bailing out Pro-Active. Principals behind Pro-Active are dealing with it. It's been done by the private sector, but I can't say who they are. That has to come from Pro-Active or their lawyers.

"Any indebtedness, including pensions and taxes, if they have not been paid, too, and I'm not saying that they haven't, will be included.

"It is a significant amount (of debt), but it's a significant project."

When asked if the financial backers could be described as secret benefactors, Mr. Scott said: "They have struck an open business deal arrangement."

But Mr. Scott refused to go into detail when asked if one of the backers was the Bermuda Industrial Union (BIU), which created a subsidiary company to put up a $6.8 million performance bond (financial guarantee) for Pro-Active when it was first awarded the project 18 months ago.

Asked whether a new company would still be brought in to manage the delayed building site, as at first believed, Mr. Scott said that would now not be necessary.

"Obviously, if we had not received satisfaction that the company (Pro-Active) could perform, and performing includes being able to meet its indebtedness, we would have had to look seriously at the next step," added Mr. Scott.

"With them satisfying their creditors and with them giving us an undertaking, they are going to continue with the job, but I think there is a possibility there will be a restructuring of management or certainly taking on additional management.

"The only shortcoming Pro-Active had was cash flow problems and ability to meet their creditors. They were doing a good job; it's a quality job being done and that's what they were hired to do.

"They are running a bit behind schedule, but that is due to a series of explanations."

Difficulties with the consultants providing the steel drawings, the September 11 terrorist attacks and initial cash flow problems all added to the delay, said Mr. Scott.

He said many of the delays were not the fault of Pro-Active.

Asked why such massive debts had been run up, and where the money had gone, the Minister said there was nothing suspicious.

"They are legitimate debts," he added. "You can see how a medium sized firm with limited cash resources could find themselves in difficulty.

"They have made purchases, like heavy equipment. It was anticipated they were going to lease the equipment, but they chose to purchase it.

"There have been delays on the site and that means billable time. They may bill us (Government) for time, but we may not be willing to pay that. I'm just doing a general overview of how money could run up, but the indebtedness seems to be legitimate and bona fide.

"It's just that they could not meet (their creditors) in a timely fashion."

However, Mr. Scott admitted he had not been aware that money was owed to BCM McAlpine or Blumber's Crane and Steel Services, and said he was only aware of debts reported to him by Pro-Active or the companies themselves.

But the Minister said there would be no need to call on the performance bond in a bid to make up for money lost so far on the job, as the benefactors were dealing with the debt and Pro-Active's contract was not being terminated.

But Mr. Scott said once the debts were paid, he hoped work would begin to escalate on the site, which experts have claimed will be a year behind its September, 2003 deadline.

Last night, BIU president Derrick Burgess refused to comment when asked whether the union was one of the mystery benefactors paying off Pro-Active's debts.

When asked to deny it if it was not true, he repeated "no comment".

And he would not comment on who any of the other backers may be.

But he said he had been told by Pro-Active that all pension, taxes and health insurance payments would be up to date within the next few days, and he said he was confident the project would get back on track.

"I'm always concerned when things are not right, no matter whether it is workers' rights or anybody's rights," said Mr. Burgess. "We have to be optimistic. You can't be negative all your life. It does not put a good look on your face."

The Royal Gazette reported last week how some companies were owed as much as $200,000 for worked carried out on the site, and many more were owed thousands.

BCM McAlpine is suing Pro-Active for more than $20,000 of supplies and mill work, which had been outstanding since last summer.

Yesterday, Blumber's Crane and Steel Services in Bermuda filed a writ over an outstanding $25,000 owed by Pro-Active for the hire of crane equipment.

Company owner Victor Roberts said Pro-Active had yesterday contacted him promising to pay off the debt, but he was leaving it in the hands of his lawyers.

"Pro-Active was good right up to November, then I began to have problems," he said. "But the debt is going back longer than three months. I'm finished with them now. If they pay me, I will go back to the site, but, until they do, I will stay away."