NICIL vs Guyana Stores Limited…GSL Chief was never told that current assets would be reduced by $200M

Mar 25, 2014 News

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The court yesterday heard that the Executive Secretary of the Government’s Privatization Unit, Winston Brassington, between June and October 2000, did not tell Mr. Tony Yassin, the Chief Executive of GSL that the net current assets of Guyana Stores would be reduced to $200M.
Mr. Yassin went back into the witness box as the matter continued before Justice Roxanne George.
Attorney at law Edward Luckhoo reminded the witness, Mr. Yassin, that on the last occasion, he gave evidence on the circumstances surrounding the signing of the Agreement of Sale on October 04, 2000.
He then referred to a meeting held in June 2000 between Mr. Brassington of the Privatization Unit and Mr. Yassin, and asked whether Mr. Brassington had told him about the negotiations between NICIL and Mr. Reaz Khan.
Mr. Yassin replied in the affirmative.  He told the court, “He told me that Mr. Khan was not able to conclude negotiations on the Share Sale and Purchase Agreement and as a result, all negotiations with Mr. Khan were cancelled. Then he asked me if I would be able to go through with the transaction and I said yes”.
Yassin was asked whether he had considered those documents and he replied in the affirmative. Further the witness was asked if after he had taken control of GSL, whether he got possession of the Board Minutes of Meetings which took place in December 1999, and he said yes. Mr. Luckhoo then asked the witness if, as far as he knew, Mr. Brassington was a Director of GSL. Yassin said no.
The witness was asked to read part of the minutes from the meeting which stated, “It was suggested that $100.0M be used from the Company’s account and the sum of $300.0M be borrowed from the National Bank of Industry and Commerce Ltd.  Interest on loan would be at the concessionary rate of 16%, and would total $48.0M”.
That meeting gave approval for the borrowing of a loan of $300.0M from National Bank of Industry and Commerce to pay dividends.
Mr. Luckhoo then asked Mr. Yassin to read to the Court the Minutes of the Board Meeting held on December 23, 1999.
Mr. Yassin read out aloud in court “The Chairman explained that the meeting was called specifically to discuss the item – The borrowing of a loan of $300.0M from the National Bank of Industry & Commerce Ltd and the payment of a dividend of $400.0M”.
The Chairman further explained that because of sensitiveness of the issue, Directors were concerned and were therefore seeking some guarantees.
“He said that a meeting was held with the majority shareholder and assurances were given that the $300.0M would be refunded if the privatization deal did not materialize, even though the dividend paid to minority shareholders could not be recouped.
“Mr. Brassington said that the Board needed to authorize the borrowing of the sum of $300.0M from the National Bank of Industry and Commerce Ltd and the payment of an interim dividend of $400.0M so that net current assets would be no less than $200.0M at the closure of the deal with the investor.”
It was noted that the net current assets amounted to $624.0M and Guyana Stores Limited would pay $100.0M from its account, the witness said.
The Head of the Privatization Unit assured the Board that the Government dividend would be held until the day before the privatization transaction was closed.
Mr. Yassin further told the court that it was only after he took over GSL that he became aware of correspondence between Mr. Reaz Khan and Mr. Brassington where Mr. Khan had complained about encumbrances.
Mr. Yassin was shown a letter dated January 29, 2000 addressed to Mr. W. Brassington, from Mr. R. Khan and copied to Mr. Samuel Hinds, Hon. Prime Minister and Mr. Manniram Prashad, Chairman of the Board of Directors of GSL. He was asked to read the letter in Court.
Yassin said that on various occasions, they had requested a detailed explanation, in writing, as to when and why the sum of approximately $3000M was borrowed from the National Bank of Industry and Commerce and the basis upon which this sum was acquired.
Yassin was also questioned about the issue of the company’s support which included the payment of an interim dividend of $400M, which was financed partly from internal resources but mainly from a short-term loan of $292.75M and the impact of this dividend payout has resulted in a depletion of cash resources, inadequate working capital and debt servicing at the rate of $4M per month in respect of Interest Charges.
According to the witness, he was never informed about the effect of the payment of the dividend. The matter was later adjourned and is expected to be heard on May 13, 2014 and June 02, 2014 at 9.15hrs.

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