The National Industrial and Commercial Investments Limited’s (NICIL’s) Special Purpose Unit (SPU) head, Colvin Heath-London is accusing the Guyana Sugar Corporation (GuySuCo) of using money from the syndicated bond it raised for unauthorised purposes.
Heath-London, made it clear, in a statement, that GuySuCo had appropriated the funds for unauthorised expenses.
His concern comes after reports surfaced that Republic Bank had halted GuySuCo’s bond financing over misuse of funds.
In fact, Heath-London has said Agriculture Minister Noel Holder and GuySuCo have appeared disinclined to use the monies for capitalising the Corporation.
According to Heath-London, this has caused lenders to express alarm at the way things are unfolding with the bond.
The executive also noted that GuySuCo is supposed to generate enough revenue to offset day-to-day expenses and debt. Heath-London added that NICIL is willing to fund GuySuCo’s programme.
NICIL, earlier this year, acquired a $30 billion syndicated bond at a rate of 4.75 per cent interest to spend on capitalising GuySuCo’s remaining estates. It subsequently emerged that part of the bond was used by GuySuCo to repay interest on another debt.
As the bond has strict requirements for how it would be used, Managing Director of Republic Bank, Richard Sammy, wrote to the bond trustees, Hand in Hand Corporation, to complain.
The Bank also called for a full explanation as to the apparent breach of the terms of the Trust Deed.
Hand-in-Hand had written to Republic Bank requesting that the purpose of the Trust Deed be changed regarding how the proceeds of the bond shall be applied. While Republic Bank has stated its no objection to the proposed changes to the Trust Deed, it said it remained disappointed that proceeds from the bond were utilised for a purpose other than what was approved.
The terms of the bond are five years, since it is expected that the proceeds of the land sale for GuySuCo would be used to repay the facility. But Minister Holder himself has been publicly critical of the transaction.
Notwithstanding GuySuCo’s financial woes, some 14 companies hailing from as far as Canada and as near as Trinidad and Tobago and Guyana have expressed interest in purchasing the three sugar estates up for sale.
A meeting with these investors and officials from the SPU was held on September 25.
According to the Unit, they would have met with the executives to discuss taxes and permits, and NICIL is expecting that they would be able to sell the Rose Hall, Skeldon and East Demerara estates by next year.
Some of the topics discussed at the meeting last week included questions about the Government’s energy policy, and whether or not there will be markets for products such as ethanol.
Permits for intended workers, the condition of the estates, and whether they are worth buying were also raised. It was indicated that the East Demerara Estate was operational during the last crop, while Skeldon is in preparation mode to open in November.
The Rose Hall estate, on the other hand, is expected to be opened in 2019. Bids for the privatisation process are expected to be submitted by October 31.
In May 2017, Government announced plans to close the Enmore and Rose Hall Sugar Estates, sell the Skeldon Sugar Factory, reduce the annual production of sugar, and take on the responsibility of managing the drainage and irrigation services offered by GuySuCo.
In November of that year, GuySuCo announced plans to retrench 2,500 workers by the end of that year. That number increased substantially and ended up being over 7,000.