$30B GuySuCo bond…$116M fee is normal for such transactions- NICIL

Oct 01, 2018 News

Amid questions about a questionable $116.16M fee paid out for a massive $30B (US$150M) financing for the cash-strapped Guyana Sugar Corporation (GuySuCo), it has been disclosed that monies were for the Republic Bank Limited Trinidad.
Hours after a report on the fee was published by Kaieteur News, the National Industrial and Commercial Investments Limited (NICIL)/Special Purpose Unit (NICIL/SPU) in a statement explained that such fees are standard for any transaction of this type and usually ranges between one to two percent of the amount being raised.
“It (the bond) is clear evidence of the confidence our financial institutions have reposed in our country which is transitioning into very exciting times with our emerging oil and gas industry. We have taken note in the very well read Kaieteur News published today of the transactional costs incurred by the arranger of the bond facility, Republic Bank,” NICIL stated.
NICIL said that the amount of $116.16M referenced in the Kaieteur News article was the transaction cost to arrange the bond facility and included, arrangers, legal, trustee, registration and paying agent fees.
NICIL disclosed that RBL Trinidad were the “arrangers”.

The “new” Skeldon factory and co-generation plant, Skeldon, Region Six.

The $30B syndicated bond would be the largest ever to be reached in Guyana, NICIL stressed yesterday.
“NICIL and the Ministry of Finance were able to negotiate a significant reduced transaction cost well below the typical costs. It is unfortunate that we were not contacted in what could only be considered a storm in a tea cup,” NICIL/SPU said.
“While it is customary for certain commercial terms of a transaction to remain private, we felt the need to respond on this point to ensure that the parties and participants in this bond maintain their confidence in our local capital markets.”
The attention is on GuySuCo, which is owned by the state, with four of the seven estates closed in the last 18 months. Over 7,000 workers have been made redundant as a result, angering unions and the Opposition, whose support depend significantly on the sugar producing communities.
Three of the closed estates- Skeldon, Rose Hall and Enmore- are now up for divestment and privatizations with more than 70 offers on the table, including a few serious ones for the entire industry.
However, the smaller-sized GuySuCo is severely cash-strapped and is depending on financing and hopefully the sale of the closed estates to stay operational.
Over 10,000 workers are depending on those three estates for their livelihoods.
Earlier this year, NICIL was mandated to seek financing.
It later announced that it has managed to raise $30B via a syndicated bond, involving Republic Bank, the Guyana Bank For Trade and Industry, Hand-in-Hand Trust, the National Insurance Scheme and reportedly a few regional financial institutions.
Last evening, NICIL said that in the past few weeks, there has been various statements made and matters reported in the press regarding the financing.
GuySuCo and the Minister of Agriculture, Noel Holder, have been complaining bitterly of not accessing the proceeds of the financing.
NICIL has said it had released over $2B to GuySuCo but there are strict rules how the monies are to be spent.
The money was supposed to buy two co-generation plants, upgrade the three factories- Albion, Blairmont and Uitvlugt- to produce plantation white sugar, contribute two years of general ongoing operations costs and expand storage and packing facilities.
GBTI and Republic Bank, in the last two weeks, have both objected to GuySuCo misusing the funds it received to pay a debt at another bank that did not even participate in the bond deal.
Responding to the Kaieteur News report, NICIL yesterday made it clear that NICIL was mandated to seek financing for the three-estate GuySuCo to reposition the corporation into a sustainable and competitive one.
“The financing was in keeping with Government’s stance that the industry, although challenged by several factors, can become profitable once a number of strategic interventions are made,” NICIL indicated.
NICIL said that these interventions would be necessary even as Government has started a process, which is well advanced, in seeking investors for the other closed estates.
“NICIL, after consultations, managed to bring to the table a number of commercial banks operating locally as well as other financial institutions. At the end of some very complex and sometimes frustrating negotiations we were able to convince a number of participants of the viability of GuySuCo.”

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