NICIL yesterday said that the sugar corporation, GuySuCo has breached the conditions of the $30b bond acquired for the industry by spending on rehabilitation works and the two sides are to set up a committee on the way forward.
In a statement, the National Industrial and Commercial Investments Limited (NICIL) was responding to a report in yesterday’s edition of Stabroek News headlined `GuySuCo being stymied by NICIL under Heath-London’s control – execs’
The NICIL statement described the article as a mixture of personal attacks on Colvin Heath-London, Head of NICIL’s Special Purpose Unit (SPU), who is also acting Chief Executive Officer of NICIL, and a misrepresentation of the facts pertaining to the disbursements of funds from NICIL to GuySuCo.
This newspaper had tried without success to elicit a comment on several occasions from Heath-London on the issues raised in the report.
Minister of Finance Winston Jordan, who is responsible for both entities, told this newspaper when contacted prior to the publication of yesterday’s SN report, that Heath-London said that he will not speak with this newspaper as “he don’t like” the reporter but will issue a press statement.
NICIL’s statement yesterday said that the management of GuySuCo placed the entire facility at risk when they used the funds for purposes for which they were not intended.
“The real source of tension between NICIL and GuySuCo is not the personality of Mr Heath-London, rather, it is the deeply rooted philosophical difference between to two agencies with regard to the structural changes and strategic directions for the industry. The Bond was obtained for the specific purpose of recapitalizing Guysuco and bringing it back to profitability. However, Guysuco instead wants to use the funds for rehabilitation works, which is the same strategy they adopted when they were receiving subvention from the Government”, NICIL said.
NICIL said that the misuse of funds prompted Republic Bank Limited (Republic), in its capacity as arranger for the NICIL/Government of Guyana Guaranteed Bond, to write NICIL requesting an update on behalf of all bondholders. In the letter, according to NICIL, Republic said that bondholders were learning, through the print media, of GuySuCo’s misuse of the funds.
NICIL said that Republic later pointed out to it that GuySuCo’s actions were in direct conflict with the conditions of the Trust Deed.
Further, NICIL said the actions of GuySuCo that violated the terms of the Trust Deed, also prompted the Guyana Bank for Trade and Industry (GBTI) to register discontent over the decisions made by the management.
NICIL said that the management of GuySuCo continues to resist its demands for accountability and compliance. As recently as February 15, 2019, it said that Dr Harold Davis Jr, CEO of GuySuCo, wrote to NICIL arguing that the sugar corporation’s management and board will be responsible for “prioritization for expenditure.” Dr Davis, NICIL said, then proposed his own structure for accountability outside of the existing structure of the facility.
NICIL said that it is stipulated in Section C of the Trust Deed that “the net proceeds from the issue of the Bonds shall be applied exclusively by the NICIL towards financing of the GuySuCo’s long-term project and capital expenditure to acquire two co-generation plants, to upgrade existing factories to produce plantation white sugar, to build storage and packing facilities, as well as to contribute for two years towards general ongoing operational costs.” Consequently, NICIL said that neither it nor GuySuCo is at liberty to determine the priorities for expenditure of the funds.
“The fact of the matter is that when GuySuCo managers first made public accusations the matter reached the President and Cabinet and Ministers Holder and Sharma were mandated by Cabinet to hold a meeting with representatives of GuySuCo and NICIL. That meeting was held on January 3, 2019. At that meeting there was a clear decision that GuySuCo would provide all the information that NICIL requested in order for the latter to give account to the bond holders and to process further requests for disbursements. To date, GuySuCo has not provided the information”, NICIL said.
It added that the Chairman of NICIL, who represented NICIL at the meeting with the Ministers, wrote to the Chairman of GuySuCo John Dow, who was himself at the meeting representing GuySuCo, outlining what were the specific requirements. He reminded GuySuCo that they undertook to provide a detailed Schedule on the transactional utilization of the net Disbursement, payment vouchers representative of the individual transactions stated in outlined Schedule, and supporting documents inclusive of quotations, bills, invoices, receipts and any other supporting documents relating to the utilization of the net proceeds.
While GuySuCo is yet to provide the information, NICIL says it has continued to honour all requests for funding. As of yesterday’s date, it said that there is no request from GuySuCo that has not been disbursed.
“NICIL acknowledges that there are differences between itself and GuySuCo, but are being taken to resolve them in the best interest of the industry and the Guyana economy as a whole. Towards this end, the two sides have agreed to address the discrepancy that exists between the recapitalization strategy envisioned by the bond instrument, one the hand, and the rehabilitation strategy and related needs put forward by GuySuCo, on the other. A joint technical committee will facilitate a resolution of this matter”, NICIL added.
The statement also said that the Stabroek News article is either based on comments from GuySuCo managers who are unfamiliar with the Trust Deed and ongoing discussions or worse, GuySuCo managers who are seeking to exploit current conditions to perpetrate character assassination and other mischief.
