$7B disbursed to GuySuCo since 2018; no records of how money was spent

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Some $.7.4B has been disbursed to the Guyana Sugar Corporation (GuySuCo) since 2018 however, there are no records of how the money is being utilised.

Since July 13, 2018, the National Industrial and Commercial Investments Limited (NICIL) has disbursed $7.420 billion in nine payments to the Sugar Company.

This is according to NICIL’s Special Purpose Unit (SPU) Head Colvin Heath-London, who was at the time hosting a long-awaited press conference to update the media and the nation at large on the diversification of the sugar estates and the status of the $30 billion bond that was negotiated last year.

“When the bond was being negotiated with the bondholders, a plan was put forward and the bondholders agreed to a certain path forward on what the proceeds for the bond should be used for,” Heath-London explained.

“We’ve had challenges where the bondholders and the trustees are not happy with the information coming from NICIL. Because as part of the arrangement, we’re supposed to provide to the bondholders evidence of what the proceeds are being used for. We have not been able to do that to date. GuySuCo is still to provide that detailed information.”

According to Heath-London, the disbursements were supposed to meet operational needs like the payment of salaries.

But if GuySuCo is not accounting for how it is actually using the monies, why did NICIL continue to disburse billions? According to Heath-London, they continued paying the money out of good faith and the need to continue financing GuySuCo as a going concern.
Heath-London noted that this situation and the general friction between NICIL and GuySuCo are not good in the long term for Guyana. He pointed out that should they default on repaying the bond, the bondholders can decide to levy on NICIL’s assets.

The assets in question, Heath-London explained, would include entities like Guyana Oil Company (Guyoil) and the Marriott Hotel, which NICIL administers through the Atlantic Hotel Incorporated (AHI).

“This standoff affects Guyana’s financial credibility on the regional and international markets. Because as simple as we may think this transaction is, there are a lot of financial institutions that are plugged in to how Guyana is operating under this bond. And whenever we go into the financial market for a bond, they may treat us the way they perceived how we operated with this bond. So it affects future funding for projects.

“As it is, if we continue this way, we are pushing NICIL and by extension the Government of Guyana in default, and we have been written and we have been chided by the bondholders and trustees for this,” Heath-London further explained. “So, we are working to bring this situation under control.”

Four disbursements were made in 2018 and five this year. The last disbursement was also the largest, $1.442 billion on April 5, 2019.

The bond was arranged last year by Republic Bank Limited, through its Investment Banking Division, with law firm London House Chambers headed by Devindra Kissoon acting as a transaction attorney. It was arranged at a rate of 4.75 per cent interest.