NICIL accuses GUYSUCO of putting $30B bond at risk
Chief Executive Officer of GuySuCo, Dr Harold Davis jr
Chief Executive Officer of GuySuCo, Dr Harold Davis jr

…says corporation continues to breach conditions
…joint technical committee to facilitate a resolution

THE National Industrial and Commercial Investments Limited (NICIL) on Tuesday accused the Guyana Sugar Corporation (GuySuCo) of breaching the conditions under which the 30-billion-dollar bond facility was established, however, a joint technical committee will be set up to iron out the issues.

In a lengthy statement on Tuesday, NICIL said it note with concern an article published in March 5th edition of the Stabroek News headlined “GuySuCo being stymied by NICIL under Heath-London’s control.”

According to NICIL “the article is a mixture of personal attacks on Mr Colvin Heath-London, Head of NICIL’s Special Purpose Unit (SPU), who is also acting Chief Executive Officer of NICIL, and a misrepresentation of the facts relating to the handling of disbursements of funds from NICIL to GuySuCo.”

Firing back at the ‘GuySuCo Executives,’ NICIL accused the sugar corporation of placing the entire 30-billion-dollar bond facility at risk when it used the funds for purposes for which they were not intended. “The misuse of funds prompted Republic Bank Limited, in its capacity as arranger for the NICIL Government of Guyana Guaranteed Bond, to write NICIL requesting an update on behalf of all bondholders. In the letter, Republic Bank stated that bondholders were learning, through the print media, of GuySuCo’s misuse of the funds,” NICIL said.

It said Republic Bank had wasted no time in pointing out GuySuCo’s actions were in direct conflict with the conditions of the Trust Deed. Finally, Republic Bank reinforced that, “it is NICIL’s sole obligation to the bondholders to ensure that the proceeds of the bond are compliant and consistent with the terms of the financial agreement.”

According to NICIL, GuySuCo’s actions also prompted the Guyana Bank for Trade and Industry (GBTI) to register discontent over the decisions made by the corporation’s management. GBTI reportedly demanded that an explanation be given for the company’s actions.

“The position taken by the bondholders, as enumerated in the Trust Deed, notwithstanding, the management of GuySuCo continues to resist NICIL’s demands for accountability and compliance,” NICIL stated.

It was pointed out that on February 15, 2019, GuySuCo’s Chief Executive Officer, Dr Harold Davis wrote NICIL and argued that the sugar corporation’s management and board will be responsible for “prioritisation for expenditure.” According to NICIL, Dr Davis then proposed his own structure for accountability outside of the existing structure of the facility.

NICIL said Section C of the Trust Deed stipulates that “the net proceeds from the issue of the bonds shall be applied exclusively by the NICIL towards financing of the GuySuCo’s long-term project and capital expenditure to acquire two co-generation plants, to upgrade existing factories to produce plantation white sugar, to build storage and packing facilities, as well as to contribute for two years towards general ongoing operational costs.” Consequently, neither NICIL nor GuySuCo reportedly has the liberty to determine the priorities for expenditure of the funds.

Acting Head of NICIL, Colvin-Keith-London

“The fact of the matter is that when GuySuCo managers first made public accusations, the matter reached the President and Cabinet and Ministers Holder and Sharma were mandated by Cabinet to hold a meeting with representatives of GuySuCo and NICIL. That meeting was held on January 3, 2019. At that meeting there was a clear decision that GuySuCo would provide all the information that NICIL requested in order for the latter to give account to the bond holders and to process further requests for disbursements. To date, GuySuCo has not provided the information,” NICIL stated.

It was noted that NICIL’s Chairman wrote GuySuCo and outlined the specific requirements. In that letter, GuySuCo was reminded that it undertook to provide a detailed schedule pertaining to the transactional utilisation of the net disbursement; payment vouchers representative of the individual transactions stated in outlined Schedule; and supporting documents inclusive of quotations, bills, invoices, receipts and any other supporting documents relating to the utilisation of the net proceeds.

NICIL said while GuySuCo is yet to provide the requested information, it (NICIL) continues to honour all requests for funding. As of today’s date, there is no request from GuySuCo that has not been disbursed.

“The real source of tension between NICIL and GuySuCo is not the personality of Mr Heath-London, rather, it is the deeply rooted philosophical difference between to two agencies with regard to the structural changes and strategic directions for the industry.

“The Bond was obtained for the specific purpose of recapitalising GuySucCo and bringing it back to profitability. However, GuySuCo instead wants to use the funds for rehabilitation works, which is the same strategy they adopted when they were receiving subvention from the government,” NICIL said.

Regardless of their differences NICIL and GuySuCo have reportedly committed to work together in the best interest of the industry and the Guyana economy as a whole. “Towards this end, the two sides have agreed to address the discrepancy that exists between the recapitalisation strategy envisioned by the bond instrument, on one hand, and the rehabilitation strategy and related needs put forward by GuySuCo, on the other,” NICIL said. A joint technical committee will facilitate a resolution of this matter.

SHARE THIS ARTICLE :
Facebook
Twitter
WhatsApp

Leave a Comment

Your email address will not be published. Required fields are marked *

All our printed editions are available online
emblem3
Subscribe to the Guyana Chronicle.
Sign up to receive news and updates.
We respect your privacy.