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14 bid for sugar estates

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SPU Head Colvin-Heath London

– raise issues of taxation, energy, state of equipment, in meeting with SPU

GUYANA’s taxation and energy policies along with the state of equipment within the three sugar estates were among issues placed on the table when the National Industrial and Commercial Investments Limited’s (NICIL) Special Purpose Unit (SPU) met with approximately 14 bidders recently.

The 14 potential bidders which hail from Trinidad, Canada and Guyana, met with the privatisation team led by Wilfred Baghaloo of PricewaterhouseCoopers (Jamaica) at the Guyana Marriott last Tuesday. The purpose of the meeting was to discuss the sale of the three sugar estates – East Demerara, Skeldon and Rose Hall – the government has agreed to privatise and divest.

SPU Head Colvin Heath-London; NICIL CEO Horace James; and external counsel Devindra Kissoon of London House Chambers were among the officials who attended the meeting.
During the meeting, the potential bidders raised a number of questions, Heath-London said in a statement issued on Sunday.

The questions covered a range of areas, including the regulatory framework in place to facilitate fair competition between the government and private sector in an industry that was predominantly led by the government; taxation benefits and exemptions that the government will provide in the risky and challenging industry; and the country’s energy policy with respect to the use of new products such as ethanol.
“The tenure or duration of the leases; issues regarding work permits; and the evaluation criteria to be used to select the preferred bidder,” were among other issues reportedly raised.

According to Heath-London, chief among the concerns raised by the potential bidders was the state of the equipment and factories. The potential bidders reportedly questioned whether they are being asked to buy essentially scrap metal.

On the issue of the continuing operations of the factories, Baghaloo told them that, “The government has gone through great pain to have scheduled reopening of all three (3) factories. The East Demerara Estate operated in the last crop and I understand that Skeldon is now being prepared to reopen in November.

“In respect of Rose Hall, I gather that preparations are being made to open operations in the first quarter of 2019. I fully understand your concerns, re buying a factory that is not a going concern and most importantly, a factory that has been closed for a long period of time.”

On the matter of the evaluation criteria, it was explained that a technical proposal will carry 70 per cent of the score and the remaining 30 per cent will focus on the price and economics to the country.

Baghaloo noted that government’s objective is to acquire qualified, experienced, competent and well-structured proposals to operate the factories for the foreseeable future.
In response to a request by many of the bidders to extend the deadline beyond September 28, 2018, a new deadline for submissions has been set as October 31, 2018.
“We would have to evaluate the status and options as we get closer to the bid date, but his primary concern was to ensure there was a level playing field, particularly for those who showed interest in the early stage of the privatisation process,” Baghaloo told the potential bidders.

NICIL/SPU had had a meet-and-greet with the prospective investors at the recently renovated SPU LBI staff compound.

THE CONTROVERSIAL $30B BOND
Heath-London said the SPU is working feverishly to make sure that all obligations arising out the recently executed $30B bond are met. This is against the backdrop of concerns raised by Agriculture Minister Noel Holder and Chief Executive Officer (CEO) of the Guyana Sugar Corporation (GuySuCo), Dr. Harold Davis.

Both Minister Holder and Dr. Davis have expressed concern over the handling of the bond facility, stating that though key in the process, the Agriculture Ministry and GuySuCo are in the dark about the Trust Deed.

But according to Heath-London, the government officials signalled a general disinterest in applying the proceeds of the bond for the capitalisation of GuySuCo, instead appropriating the monies for unauthorised expenses.

“This has resulted in lenders signalling alarm, especially since GuySuCo ought to be generating sufficient revenue from its operations to offset its day-to-day expenses and debt obligations,” he said.

According to him, NICIL SPU stands ready to fund GuySuCo’s programme. The Syndicated Bond has gained negative attention in the press, the SPU head noted, while assuring that it is in keeping with the functions and obligations of the unit.

“As will be recalled, the National Industrial and Commercial Investments Limited was mandated to seek financing for the three-estate Guyana Sugar Corporation (GuySuCo) to reposition this very critical 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. 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 much consultations, managed to bring to the table a number of commercial banks operating locally as well as other financial institutions,” he explained.

According to him, at the end of some very complex and sometimes frustrating negotiations, the SPU managed to convince a number of participants of the viability of GuySuCo.
“The $30B syndicated bond would be the largest ever to be reached in Guyana. It 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,” he said.
Heath-London said the SPU and by extension NICIL has taken note of the concerns raised in the press about the transactional costs incurred by the arranger of the bond facility, Republic Bank. “The amount of $116.16M referenced in the article was the transaction cost to arrange the bond facility ‘Arrangers Fees” and included, arrangers, legal, trustee, registration and paying agent fees (Noting RBL Trinidad were the arrangers). Such fees are standard for any transaction of this type and usually ranges between 1 – 2 per cent of amount being raised,” Heath-London explained.

NICIL and the Finance Ministry, he said, were able to negotiate a significantly 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. 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,” he said.

Replies sorted oldest to newest

Mitwah posted:
kp posted:

The 14 potential bidders which hail from Trinidad, Canada and Guyana, met with the privatisation team led by Wilfred Baghaloo

Anyone knows the team from Canada?

Yes!

Hey, you might end up laughing last deh bai!

FM

When I read, leads me to believe the GoG will be on the hook with some onerous clauses.  It’s a sale alright, with a lot of clawbacks expected.  

Mits, you and them boys prapa tough!

FM
Baseman posted:

When I read, leads me to believe the GoG will be on the hook with some onerous clauses.  It’s a sale alright, with a lot of clawbacks expected.  

Mits, you and them boys prapa tough!

Wilfred's credentials is pretty impressive. He looks like Freddi's brother. 

Mitwah
Baseman posted:
Mitwah posted:
kp posted:

The 14 potential bidders which hail from Trinidad, Canada and Guyana, met with the privatisation team led by Wilfred Baghaloo

Anyone knows the team from Canada?

Yes!

Hey, you might end up laughing last deh bai!

Hope the reopening of three estates will alleviate the shortage of labor problems. We might see unemployed cane cutters from closed sugar estates moving to these three areas.

FM
kp posted:

Enmore should be given to DDL so they continue the production of the best Rum in the world at a competitive price.

I agree. Letting the estate just sit there and rot is a waste of resources.

FM

How does GuySuCo's $$Billions liability in severance pay owing to sacked sugar workers factor into this scenario? As I understand it, the $30B bond money cannot be used for severance pay, wages & salaries etc. No indication so far whether GuySuCo's three functional estates are making profits that can cover the severance payments liability. Is the government hoping to get the money from the sale of Skeldon, Rosehall, Enmore & Wales? 

FM
Gilbakka posted:

How does GuySuCo's $$Billions liability in severance pay owing to sacked sugar workers factor into this scenario? As I understand it, the $30B bond money cannot be used for severance pay, wages & salaries etc. No indication so far whether GuySuCo's three functional estates are making profits that can cover the severance payments liability. Is the government hoping to get the money from the sale of Skeldon, Rosehall, Enmore & Wales? 

That has nothing to do with anything regarding this transaction.  That’s for GuySuCo to resolve with their former workers!

FM
Mitwah posted:
kp posted:

Enmore should be given to DDL so they continue the production of the best Rum in the world at a competitive price.

Samlall is looking for you. 

Bend over Samlall will come. GAY BOY

K
kp posted:
Mitwah posted:
kp posted:

Enmore should be given to DDL so they continue the production of the best Rum in the world at a competitive price.

Samlall is looking for you. 

Bend over Samlall will come. GAY BOY

KP = Kutia Pervert. Is it only buggery you have on your mind? Samlall mentioned how you and your police friend from Barnam or Philadelphia drink up and never paid.

Mitwah
cain posted:

Rich boy yugiski should put his $ where his mouth is and help dem po po people, buy the land and get dem workin. He has to rememer..ahem...ahem....Money talks bullshit walks.

Yuji lil short on cash. He had to give Harmon a brown paper bag when he was in Canada recently. PNC collecting for LGE.

Mars
kp posted:

The 14 potential bidders which hail from Trinidad, Canada and Guyana, met with the privatisation team led by Wilfred Baghaloo

Anyone knows the team from Canada?

KP Bhai,

That is confidential for now. 

FM
yuji22 posted:

On a serious note, Harmon will make a very good pro business President.

huh? what’s Harmon got to do with sugar divestment?

noted . . . Yuji “serious” chairing the Harmon for President campaign early

ahmmmm . . . OK

FM
Last edited by Former Member
yuji22 posted:

Bai, you don’t understand how business does work. Anyway, keep thinking and you might get the big picture.

yuh talkin to the wind or you just afraid to engage me directly?

FM
Last edited by Former Member

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