THE National Industrial and Commercial Investments Limited’s (NICIL) Special Purpose Unit (SPU) has secured a $30B syndicated bond to aid in the revitalisation of the country’s sugar industry.

“We have made strides in the international markets to secure a syndicated bond for $30B. I am pleased to announce we have been very, very successful and we have very good rates,” announced SPU’s head and Chairman of the Guyana Sugar Corporation (GuySuCo), Colvin Heath-London.

London told Guyana Chronicle that the entity will be receiving the cash in two weeks’ time and will have a five-year repayment period. Heath-London said he was not in a position to disclose specifics on the securing of the bond or the terms related to same. Syndicated bonds are deemed the most common way to sell debt and it is widely used by companies, governments and other organisations.
A group of banks are usually paid to demand from other investors and so if the entire bond is not sold then the banks must buy that which is left. Through this process, the borrower can be confident of raising the entire amount desired.

REVITALISED
In an interview Wednesday, done for the Ministry of Finance’s television programme Dollars and $ense, Heath-London said the sugar industry has to be revitalised to be successful. “One of the things we have to do is recapitalise GuySuCo. It has always been my firm belief that we should not be dependent on the government and by extension taxpayers for our viability,” said the SPU head.

Heath-London explained that preliminary discussions have been made with some of the banks GuySuCo is indebted to “with a view of them taking a hair cut in terms of what is owed to them.” “The banks seem to be very favourable and myself and the technical team are working towards bringing this to fruition,” said Heath-London who noted that the goal is to make GuySuCo debt-free in the medium to short term. “We can’t keep spending on the industry just to try to maintain the production of sugar and to revitalise,” stating that GuySuCo needs to bring on board more capital projects. He said the company has to be re-energised to look at markets and move away from only a sugar-producing company to a value added company where it should be market and sales driven.

In the interview which is aired every Thursday on TVG and HBTV9 at 20:00hrs, with rebroadcasts on HGPTV67 on Sundays at 18:00hrs, NTN69 at 16:30hrs and NCN on Tuesdays at 20:05hrs, Heath–London said it means GuySuCo has to produce what the market wants and move away from being a raw sugar manufacturer to a value sugar product manufacturer. “What we are trying to do now is have a paradigm shift, where we shift from being just a production sector to a sales business and marketing model. This is the only way we can be profitable and survive,” said the SPU head.

He said it is the plan of the company to start co-generation that would allow GuySuCo to earn revenues to produce electricity for the national grid, to get involved in sugar juices such as molasses and cane juice, additional packaging for concentrated markets and start “plantation white sugar”.

These projects Heath-London said will be different and viable income streams for the company. “So we can be in the short and medium terms on the road to profitability,” he said noting that GuySuCo has a future here.

Meanwhile, the acquisition of the syndicated bond comes exactly one month after the SPU said it was seeking $30B over a four-year period to provide much-needed capital injection into the Albion, Blairmont and Uitvlugt estates. The sum is aimed at covering infrastructure maintenance, upgrades and development of new co-generation capacity to support operations of the estates and sell power to the national grid. The unit said it was confident in its business case for GuySuCo and expects positive results with respect to securing funding for the sugar operations. It is the SPU’s responsibility to secure funding for GuySuCo’s current and short-term operations.

SPU took control of the Skeldon, Rose Hall, Enmore and Wales estates, when government decided to close operations early this year in order to maintain the viability of the sugar industry. In January 2018, the SPU was tasked with having the estates valued and preparing them for sale, but Minister Jordan said that in order to add to the process of selling the estates or at least attracting a buyer(s), the two estates should be reopened.
“We cannot keep them closed and moth-balled, because when the buyers come they would probably not be as impressed as if they were working … once in operation they (investors) could also see that they are valuable properties to acquire,” Jordan told reporters.
The APNU+AFC coalition government upon assumption of office in May 2015 said it discovered the extent of debt facing the sugar corporation. A Commission of Inquiry (CoI) established into the operations of GuySuCo found all of the corporation’s earnings were being spent on wages and salaries, a situation which could not be sustained by government bailouts.

GuySuCo was for years being bailed out by the government and in the first six months of taking office, the coalition government provided $16B to keep paying wages and salaries. GuySuCo earned about US$90B annually but that was not sufficient to pay wages and salaries. Further, the decision to restructure GuySuCo stems from several factors, including the financial challenges presented by high production costs and low world market prices following the removal of preferential sugar prices to African, Caribbean and Pacific (ACP) countries by the European Union (EU).

It was also discovered that the Skeldon factory was producing at US 60 cents per pound and selling at US 15 cents; Albion produced at US 20 to 25 cents and selling at US 15 cents; Rose Hall produced at US 45 cents a pound, selling at US 15 cents; Blairmont produced around US 22 cents, selling at US 15 cents; Wales produced around US 55 cents, selling at US 15 cents; Uitvlugt producing around U.S. 30 cents, selling at US 15 cents.