GuySuCo wants to use $30M bond money to buy SUVs - report

GuySuCo wants to use $30M bond money to buy SUVs – report

Jun 05, 2019 News

Cash-strapped Guyana Sugar Corporation (GuySuCo) has reportedly made requests to buy sport utility vehicles (SUVs) for its three estates, but it is unlikely that permission to use proceeds of a $30B bond will be granted.

Uitvlugt, on the West Coast of Demerara, is one of three estates remaining under GuySuCo.

The bond was negotiated and being controlled by the state-owned National Industrial and Commercial Investments Limited (NICIL).
It was supposed to be used to finance long term projects for the three-estate, smaller-sized GuySuCo, including acquisition of two co-generation plants; upgrade of existing factories; the production of Plantation White Sugar; the construction of more storage and packaging facilities and the financing of two years of general operational costs.
NICIL has been at odds with GuySuCo over the use of the bond in operations with the bond holders and trustees complaining and writing for details of the spending.
On Monday, NICIL during a press conference was asked to confirm reports of vehicles being purchased.
Expressing surprise, NICIL’s acting head, Colvin Heath-London, said that it was only recently that one of the bond holders and trustees asked whether there was an application for money by GuySuCo to buy vehicles.
According to Heath-London, it was “rumored” that GuySuCo has requested duty-free concessions to purchase vehicles.
“We were asked questions directly…we could not answer. We have asked that the request be made to the Ministry of Finance. I cannot speak.”
Asked if such a request for funding from the bond comes from GuySuCo would be approved, the NICIL official said it was unlikely, as it would not be in keeping with the arrangement of how the bond is to be used.
On Monday, it was disclosed that GuySuCo drew down more than $7B since last year, but that NICIL had not evidence how the money was spent. The situation may very well put NICIL on the back foot with the financiers of the bond, which include a number of banks and insurance companies.
NICIL had been criticised by the Ministry of Agriculture, which has responsibilities for GuySuCo, for the seeming sloth in the disbursements of the funds.
The three estates remaining under GuySuCo are Albion, Blairmont and Uitvlugt.
According to Heath-London, if there is any default on the bond payments, it is not GuySuCo’s assets that can be seized. Rather, it is NICIL’s assets that will suffer.
In fact, several state-owned companies, which are managed by NICIL have their assets pledged. These include the Guyana Oil Company, Guyana National Shipping Corporation, Guyana National Printers Limited and even facilities of the Guyana National Industrial Company.
GuySuCo had seven estates up to 2015, but was struggling to pay workers and retool.
It had been demanding billions of dollars annually in bailouts.
Following an inquiry into the industry, the Coalition closed four estates – Skeldon, Rose Hall, Enmore and Wales, placing over 5,000 workers out of jobs.
The privatization process of the four estates has started, with a deal likely to be announced by mid-year on Rose Hall.
GuySuCo is one of the biggest state-owned companies, but low world prices, loss of its preferential market in Europe, aging factories and a large migration of workers, have not been helping.