Jun 04, 2019 News
NICIL’s acting head, Colvin Heath-London, and PwC’s partner, Wilfred Baghaloo, at the press conference yesterday.
Since last year, the Guyana Sugar Corporation (GuySuCo) has been drawing down on the first tranche of a $30B (US$150M) bond that was supposed to make the operations of the three-estate, smaller sized industry more efficient.
However, almost a year later since that bond was approved, the disbursement process is troubled with no clear ideas what GuySuCo used the money for.
It has collected more than $7B since August and has a request for another $1B pending.
But according to the state-owned National Industrial and Commercial Investments Limited (NICIL) which had helped put together the bond, GuySuCo has not been holding up its end of the bargain in submitting details how the money it collected were spent.
In fact, while it is known that a significant portion was used to pay salaries and wages of estimated 10,000 workers, the bond holders and trustees have been asking how the money were used by GuySuCo.
The situation may very well put NICIL on the back foot with the financiers of the bond which include a number of banks and insurance companies.
A number of them have written NICIL to express worry about what the cash-strapped GuySuCo is doing with the money.
Yesterday, NICIL’s acting chief, Colvin Heath-London, during a press conference at his Camp Street office, was under pressure to explain the bond.
NICIL had been criticized by the Ministry of Agriculture, which has responsibilities for GuySuCo, for the seeming sloth in the disbursements of the funds.
The three estates remaining under GuySuCo are Albion, Blairmont and Uitvlugt.
According to the official, NICIL and its Special Purpose Unit (SPU) arm, approached the financial market for financing of a bond last year.
In the first of its kind, and the largest, NICIL/SPU managed to raise $30B.
Since last year, over $7B was paid over to GuySuCo to finance long term capital projects, including the acquisition of two co-generation plants; upgrading of existing factories; the production of Plantation White Sugar; the construction of storage and packaging facilities and the contribution of two years of general operation costs.
According to Heath-London, if there is any default on the bond payments, it is not GuySuCo’s assets that can be seized.
Rather, it is NICIL’s assets that will suffer.
In fact, several state-owned companies which are managed by NICIL have their assets pledged. These include the Guyana Oil Company, the Guyana National Shipping Corporation, the Guyana National Printers Limited and even facilities of the Guyana National Industrial Company.
NICIL has about a dozen other state companies under its remit, including Atlantic Hotel Inc., which owns Marriott.
Health-London admitted that the bond holders and trustees are not happy with the lack of information from GuySuCo.
He said if the situation continues, it will push NICIL and the Government of Guyana into default.
The situation will have implications on future financing with the international funding agencies likely paying attention.
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