NICIL’s assets used as collateral to secure $30B bond

– Heath-London confident it could be repaid in 5 years

By Samuel Sukhhnandan

One day after announcing that the Special Purpose Unit (SPU) was successful in acquiring a syndicated bond worth $30 billion to assist with the revitalisation of the Guyana Sugar Corporation (GuySuCo), Head of the SPU of the National Industrial and Commercial Investments Limited (NICIL), Colvin Heath-London has now revealed that the entire NICIL balance sheet was used to obtain this bond.
Heath-London told Guyana Times in an exclusive interview on Thursday that the

bond was attained from both regional and local commercial banks with a favourable repayment rate over a five-year repayment period.
He reiterated that the bond was secured at good rates with local banks being the lead lenders, and noted that the disbursement of this loan to GuySuCo could take place in two weeks’ time.
“Most of the institutions are local and regionally with Republic Bank as the lead. I would not like to divulge the interest rates but it’s very favourable. In the agreement there is a possibility of us repaying before time… and we have due consideration with the bond where we can repay a one-year moratorium. Also, we could get things together before we start repaying,” he explained.
However, the new revelation made by the SPU head now means that besides putting up the assets belonging to GuySuCo, assets from other companies that fall under the purview of the NICIL was used as an advantage to acquire this massive loan for GuySuCo. NICIL is the holding company for Government-owned minority

and majority interests, and property management.
“It is basically using the balance sheet of NICIL to collateralise the bond,” the SPU head explained. He also revealed that it may be the largest bond GuySuCo has taken out in their history, something that was raised by Opposition Leader Bharrat Jagdeo, who has expressed scepticism and worry over the fact that the proposal by the Government to spend $30 billion on three or four estates could result in a significant portion of the funds being “wasted” given the track record of the People’s National Congress Administration.
Jagdeo had also questioned whether the move by GuySuCo and NICIL even fits in with the long-standing policy of the current Government to borrow long-term loans only on concessional terms. He claimed that the bond was a ‘commercial debt’ that may have not even been concluded on concessional terms.
Pressed to explain if this may be true, Heath-London said, “I wouldn’t want to speak to that but what I would like to say is, the idea is to let GuySuCo be self-financing and to reduce the burden on the taxpayers to find funds for GuySuCo and to basically operate our financial affairs in a context where we at GuySuCo can sustain the business…Normally they were totally for the most part wholly dependent.”
While there are concerns about debt servicing and the impact of what happens with securing loans or bonds at a specific interest rate, Heath-London said, “We are confident because there are other things basically afoot in the GuySuCo space selling designated lands. So we will have income from that. The potential of privatising the estates, we will also have income from that. So, we are collectively confident that within the five-year period we will be able to repay this bond.”
He brushed aside suggestions that taxpayers will have to foot the huge bill that GuySuCo has acquired, explaining that revenue from GuySuCo and their associated businesses will help to repay this bond. “GuySuCo through its related Ministries will have to sit and decide what it is to be done. The bond will help to bring additional businesses to GuySuCo in terms of their commitment to cogeneration, different sugar product sources in terms of value added, and ultimately the Ministry will decide the route.” He said he doesn’t envisage any misuses of the funds, as different income streams will be created.
The idea behind the borrowing of this syndicated bond is to assist the SPU with the reopening of the estates to prove to potential investors that they are viable. Heath-London was clear that the loan will also assist with plans to make GuySuCo debt-free and return the industry to profitability.
The Opposition is of the firm view that the idea of securing a syndicated bond is mainly aimed at clearing the multibillion-dollar liabilities that GuySuCo has accrued, in order to give “handpicked” investors a clean slate and better opportunities to maximise their profitability when they purchase estates.
Some 4000 sugar workers from Enmore, Rose Hall and Skeldon were dismissed from their jobs following the downsizing of the sugar industry which began to take effect in late 2017.