Govt silent on progress report on interested investors
Closed sugar estates
…$132.5 million interest past due on unused $30billion bond
The work of the Special Purpose Unit (SPU) with regard to potential investors and the progress of divestment of the four closed sugar estates is still to be revealed to the public.
In November last year, the SPU had released a list of five bids that were submitted for the sugar estates of Enmore, Skeldon and Rose Hall. PricewaterhouseCoopers (PWC) closed off the bidding process for offers on the estates on October 31, 2018.
Demerara Distillers Limited (DDL) was expected to submit a bid for the Enmore Sugar Estate, however, the company announced that “intense deliberation” led the company to backpedal on that consideration.
The company’s primary reason for considering an offer was because of its need for molasses, of which, the company experienced a shortfall after the closure of the three Guyana Sugar Corporation (GuySuCo) estates, the release stated. DDL refused to submit a bid because it could not find a model for the Enmore estate that would fit its current investment and development strategy, in-keeping with the information memorandum governing the bidding process.
PWC’s Managing Director, Wilfred Baghaloo, at that time had said he was appointed “to oversee certain aspects of the privatisation” of the three sugar estates. Baghaloo oversaw the beginning of the marketing period in July, last. This process involved the placement of advertisements in media publications in Guyana, Jamaica, Barbados, Belize and Trinidad, since those Caribbean markets comprise companies in the business of sugar production.
For the estates, PWC’s San Francisco team was at that time in the process of doing a business evaluation, which is based on future cash flows and historical earnings, and an assets valuation, which will be based on the market price of individual assets driven by age, functionality and manufacture type, among other valuation criteria.
Baghaloo and his team had intended, prior to the evaluation of each offer, to determine whether the bid proposals are in-keeping with the terms of the information memorandum that they were provided.
Privatisation Specialist of NICIL, Shawn Persaud, at that time said the bids will be considered on the premise that they intend to utilise the estates for works in the cane industry, not limited to sugar, This, he explained, is because it is hoped that the successful awardee(s) of the leases will re-employ the skilled workers who were laid off after those estates were closed.
However, since this year began, no word has come from the Government as to the position of those four sugar estates it had shut down which had resulted in thousands of sugar workers being left jobless.
Agriculture Minister Noel Holder told this newspaper when contacted that he did not have that information, since the management and decisions made in relation to those closed estates in question are not in his domain.
“Cabinet made a decision that we are going to right size the industry and just concentrate of three estates for sugar that falls under the Agriculture Minister. There was a Special Purpose Unit created under the Finance Minister to divest the four estates; Wales, Rose Hall, Skeldon and Enmore.
They are looking at that, I should not pronounce on that, because that is not within my portfolio. You will have to talk to the Finance Minister for that,” he stated.
Attempts by Guyana Times to contact Finance Minister Winston Jordan, proved futile.
The SPU under NICIL secured a $30 billion through commercials banks, both in Guyana and the Region, as part of the diversification initiatives. The bond was secured solely by bondholders in the Government, and not against any assets of NICIL or GuySuCo.
The commercial lending rate for Guyana at the time was 13.0 per cent, while the NICIL bond was issued at 4.75 per cent, which is 8.25 per cent lower than the rate that most companies borrow at in Guyana.