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Bond financing for GuySuCo… US$85M secured entirely from local market

May 27, 2018 News

More details are emerging of the US$150M syndicated bond secured for the four sugar estates which were closed by the end of last year.
The state-owned National Industrial and Commercial Investments Limited (NICIL) received the first tranche, roughly US$85M which was disbursed on May 24, 2018, with the residual tranche to be issued to NICIL as is needed.
The full bond which was arranged by Republic Bank Limited exclusively through its Investment Banking Division represents Guyana’s aggressive reentry into the capital markets arena.
According to information, the Government guaranteed bond has been issued for a five-year term with a rate of return of 4.75 percent per annum.
NICIL is expected to raise the remaining US$65M within the next few months through a combination of local and regional investors, including those in Trinidad and Jamaica.
Officials are planning a targeted road show to be launched within the coming weeks to raise the remaining amounts needed by NICIL.
Republic Bank was reportedly able to successfully tap the local investor market to raise mutually beneficial financing for the Guyana Government and investing subscribers.
Reports indicated that the bond was oversubscribed by the local investor market shortly after its announcement.
The funds raised are to be used towards the Guyana Sugar Corporation (GuySuCo) capital expenditure and general operations.
NICIL’s team lead by Colvin Health-London, the head of the Special Purpose Unit (SPU), structured the bond to recapitalize GuySuCo’s operations.
GuySuCo has struggled to raise the funds needed to revamp its operations and has relied heavily on Government bailouts to stay afloat.
The estates have been placed under the SPU which is tasked by Government to execute privatization plans for the Skeldon, Rose Hall, Enmore and Wales Estates that were closed in keeping with Government’s ‘right-sized’ approach for the sugar corporation.
Observers have noted that through the Government’s local content mandate, the transaction was consummated entirely using Guyanese companies and local legal counsel, Hand-in-Hand Trust Corporation acting as Trustee, Guyana Americas Merchant Bank Inc as paying agent.
According to information, in the negotiations, the Attorney General’s Office represented the Government; NICIL represented by its In-House counsel; the Ministry of Finance through its debt management team; and Republic Bank Limited represented by Devindra Kissoon of London House Chambers.
It was noted that this demonstrates the capacity of Guyanese to handle the sophisticated transaction to close the deal.
Last year, Government established the SPU, hiring Heath-London to supervise the privatization and divestment process of the four closed estates, which also included Wales.
Heath-London has been lending advice to the Government of Jamaica and had helped put together the Timehri airport US$150M expansion project that is supposed to be completed this year.
GuySuCo has been racking up a decade of losses despite over $30B in bailouts by Government in the last three years.
An inquiry ordered by the Coalition Government after it came to office in 2015, recommended actions to be taken to reverse the fortunes.

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