In the 18 months or so, the Coalition Government closed four sugar estates as part of the plan to “right-size” the industry and bring it back to profitability.
The four estates closed were Skeldon, Rose Hall, Enmore and Wales.
GBTI’s Executive Director, Richard Isava
GuySuCo’s Paul Bhim
SPU’s head, Colvin Heath-London
The closures would have left the remaining three estates- Albion, Blairmont and Uitvlugt- with a perpetual cash shortage.
Earlier this year, the administration announced that the National Industrial and Commercial Investments Limited (NICIL), a state-owned company, was seeking financing for the smaller-size, three-estate Guyana Sugar Corporation (GuySuCo), which is projected to produce just 100,000 tonnes this year.
The money was supposed to buy two co-generation plants, upgrade the three factories to produce plantation white sugar, contribute two years of general ongoing operations costs and expand storage and packing facilities.
It was later announced that a $30B (US$150M) financing was found, via a bond facility, the largest of its kind ever in Guyana.
For the transaction, an “arranger” was paid over $116M.
Participating in the facility was Republic Bank, Guyana Bank For Trade and Industry Limited, the National Insurance Scheme, Hand-in-Hand Trust and reportedly a number of regional banks.
In early July, NICIL and its Special Purpose Unit (SPU) wrote Paul Bhim, the Chief Executive Officer (ag) of GuySuCo, on the release of the funds from the syndicated bond.
NICIL/SPU’s head, Colvin Heath-London, explained that his entity would have to be reimbursed transactional fees.
These fees were incurred by NICIL-SPU- the amount was $116.16M- for securing the bond facility.
The $116M was reportedly paid over to the “arranger” from the funds provided by the syndicated bond, Heath-London told Bhim.
This money will eventually have to be repaid to subscribers of the instrument with interest.
“This amount will therefore have to be included with the total Related Party Payable, to reflect the costs that have been incurred by NICIL-SPU.”
The bond facility raised its head recently with GuySuCo complaining bitterly that NICIL/SPU is not releasing the monies.
GuySuCo reportedly paid some of the monies to a bank for an outstanding debt.
NICIL/SPU, on the other hand, insisted that the monies must be used specifically for the purposes that it was acquired for.
Currently, Republic Bank has filed a complaint against GuySuCo, complaining about the use of the proceeds of the bond facilities to pay a debt at another bank. Republic Bank suspended its part of the transactions pending an explanation of what GuySuCo did.
On Tuesday, the Guyana Bank For Trade and Industry Limited joined Republic Bank to write Hand-in-Hand Trust to register its unhappiness with how the monies were being spent by GuySuCo.
GBTI’s Executive Director, Richard Isava, demanded an explanation from GuySuCo why they would use the monies to pay a debt to a financial entity that is not a participant of the bond facility.
GuySuCo is reportedly unhappy with the managing of the bond facilities proceeds by NICIL/SPU.
A few days ago, Agriculture Minister, Noel Holder, was highly critical of the bond facility, complaining that the monies were slow in coming.
GuySuCo, this past week, cancelled the opening of a staff lounge at LBI that had been rehabilitated by NICIL/SPU.
Government has insisted that it can no longer upkeep GuySuCo which in the last decade bled the country billions of dollars in bailouts, most to the distress of the rest of Guyana.
The four closed estates are up for sale with the Coalition Government anxious for an early sale.
Several companies have made offers with a few making a bid for the entire industry- including a very serious one from the Middle East.
GuySuCo has been a hot political potato with the Opposition’s support base built on the sugar industry.