NICIL still to raise $13.6B to recapitalise GuySuCo’s operations
The National Industrial and Commercial Investments Limited (NICIL) still has to raise a whopping $13.6 billion to finance the complete revitalisation and recapitalisation of the operations of the Guyana Sugar Corporation (GuySuCo).
In a release to the media on Saturday, NICIL said it expects to raise the remaining sum of US$65,000,000 which is equivalent to GY$13.6 billion within the next few months through a combination of local and regional investors.
It is expected, according to the release, that the money will be used to finance the complete revitalisation and recapitalisation of the operations of GuySuCo which has been dogged by poor performing loans, increasing levels of debt and mismanagement as well as an inability to meet set and revised production targets.
“… A targeted roadshow is expected to be launched within the coming weeks that will likely include investor briefings in Trinidad and Jamaica” in order to raise the much needed funds, the release noted.
This is despite NICIL raising another whopping $30 billion via a syndicated bond this year.
Bond facility
NICIL also confirmed on Saturday that it officially issued a US$150 million equivalent bond facility, arranged by Republic Bank Limited exclusively through its Investment Banking Division, with local law firm London House Chambers headed by Devindra Kissoon acting as a transaction attorney.
“…the bond will be issued in multiple tranches, with the first tranche of roughly GY$17 billion or US$85 million equivalent being issued to local investors on Friday, May 25, 2018. With the issue, NICIL became the first public issuer to raise debt in the local capital markets in over 10 years”.
The holding company also confirmed that the bond is the largest ever bond facility arranged in Guyana and was oversubscribed by local investor on the first tranche as it explained that the proceeds of the bond issue will be used towards capital expenditure and general operations for GuySuCo.
NICIL’s team was led by Colvin Health-London, the head of its Special Purpose Unit who managed to seal the deal despite the fact that historically, cash-strapped GuySuCo struggled on its own to raise the funds needed to revamp its operations.
“…under the management of Mr Heath-London, funding was secured through the Stated-owned entity with the support of the Government of Guyana through a sovereign guarantee.”
Guyana Times had reported that Guyana will have to pay approximately 4.75 per cent interest on the whopping $30 billion bond it secured recently to revitalise the operations of the three estates which fall under the management of GuySuCo, or all of the assets and companies owned by the National Industrial, Commercial and Investment Limited (NICIL) could be lost.
A source close to the Finance Ministry told Guyana Times had stated that while the interest rates secured would appear to be very favourable, the implications of failing to consistently repay the bond and related interest rates would be dire.
“This is a very serious undertaking and Guyanese must watch closely at the consequences for [Special Purpose Unit] SPU/NICIL, GuySuCo and the country if Guyana defaults on its payments to those local and regional commercial entities that granted the $30 billion bond,” the source emphasised.
When questioned during an exclusive interview on the repayment of the bond by GuySuCo, Board Chairman Heath-London insisted that the SPU and GuySuCo were committed to ensuring that all the necessary repayments were made and strict adherence to financial best practices were followed within GuySuCo to ensure that there was no wastage of revenues secured by the sugar company from its ongoing operations.
But the source close to the SPU revealed that GuySuCo, with the financial advice of NICIL and the SPU, would embark on a process that could see the company selling some $3 billion worth of spare parts that were currently lying in its storage bond.
Also, a proposal has been made to secure another $10 million by selling scrap metal sourced from around the company’s East Demerara Estates.
This publication was told that over the next few months, GuySuCo would embark on the process of selling prime real estate which were not being utilised. Some 4600 acres would be up for grabs. From that alone, the SPU and GuySuCo hoped to garner a whopping $50 billion if sold at different intervals.
Further, the Unit could seek to secure some $265 million by selling the lands in and around the Wales Estate owned by GuySuCo.
Efforts by this newspaper on Saturday to confirm whether or not GuySuCo and the SPU were seriously considering taking the aforementioned measures in order to pay back the bond were futile, as calls and texts to the GuySuCo Chairman’s mobile phone went unanswered.
NICIL acts as a holding company for Government-owned minority and majority interests, property management which includes the acquisition, disposal and rental of Government owned properties.