May 12, 2017 News
– Scheme to work on better management for high-risk investments
While the Guyana Sugar Corporation (GuySuCo) is still neck deep in over $90B in debt, it is still trying to make some effort to clear what it can.
This can be seen in the case of the National Insurance Scheme (NIS). The state-owned Sugar Corporation owes contributions to the Scheme that is in excess of $1.5B.
Kaieteur News understands that arrangements are being put in place to have this debt cleared up. This newspaper was also informed that GuySuCo is the largest defaulter at NIS. This was confirmed with NIS officials, along with Finance Minister, Winston Jordan.
The issue of GuySuCo’s indebtedness is one where the NIS is also keen on addressing, as its previous management style left the company holding the strings to a number of reckless investments.
The most high-risk investments for NIS remains those made into the Berbice Bridge Companies Incorporated (BBCI).
The Scheme has the following investments in the BBCI: (a) Corporate bonds – $1,060,000,000 (b) Subordinated Loan – $500,000,000 (which is a debt that ranks after other debts if a company falls into liquidation or bankruptcy). (c) Preference Shares – $950,000,000 and (d) Common Shares – $80,000,000.
The ability of BBCI to pay interest/dividends/capital repayment will depend on its ability to generate profits. To-date it has made accumulated losses of $1,507,062,759 based on its 2014 audited financial statements.
As a result, the investment in BBCI’s Common Shares may be impaired as the current net worth of an ordinary share is ($2.77) based on its 2014 audited financial statements.
Financial analysts have noted that the Scheme’s investment in the Bridge is almost certain to be negatively affected. It was even stated that already, the ordinary shares have been impaired to a negative value, and the subordinate loans preference shares may also have been impaired.
Financial experts have recommended that given the high-risk nature of the Scheme’s investments, the new Board should assess the risks and returns of investments held in BBCI.
In addition, it was suggested that the scheme must carry out its own investigation to determine the value of the Bridge which was reported at $6,284,045,483 net or US$29,924,026 at December 31, 2014 in the audited financial statements.
Kaieteur News also understands that recommendations were made for the Scheme’s Investment Committee to meet with the BBCI’s management to restructure the existing ‘Concession Agreement’ which will allow NIS to have a more dominant role in view of its shareholdings.
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