Shareholders never received a penny on $400M investment

Berbice Bridge Tolls

– but still subsidised Bridge for 8 years

In all the eight years of operation of the Berbice Bridge Company Inc (BBCI), the common shareholders have never received a single dollar in dividends on their $400 million investment. The alleged “inequity and injustice” being bandied around that the shareholders are cashing in on hefty

Presidential Adviser on Sustainable Development, Dr Clive Thomas

sums while the poor is suffering is entirely false.
Presidential Adviser on Sustainable Development, Dr Clive Thomas told another media entity that the contractual agreement between the Government of Guyana and the BBCI is “outrageous, ruthless and unconscionable”, because it allows for a handful of individuals affiliated with the previous People’s Progressive Party/Civic (PPP/C) Administration to get “filthy rich for the rest of their lives at the expense of the poor.”
But the truth is, as is being pointed out by the Bridge Company, the BBCI never generated enough revenues to produce profits which could have been used to release dividends to the common shareholders. These shareholders are Secure International Limited; the National Insurance Scheme (NIS); NEW GPC INC; Queens Atlantic Investment Inc; Hand-in-Hand Mutual Fire and Demerara Contractors Limited (owned by the Demerara Distillers Limited – DDL).
If you own common shares, you are not automatically entitled to a dividend every year; the dividend will be paid only if the company makes a profit and declares a dividend and this has been the case with the Berbice Bridge. However, a shareholder of “preferred stocks”  is entitled to a dividend every year at a stipulated rate. For the Berbice Bridge, the Preferred Shares are all owned by the National Insurance Scheme (NIS) and it has received dividends excepting in 2014.
In that year, the cash flow proved problematical because ,as contracted, there had to be a $500 million payment on the principal of an outstanding bond debt. The requested toll increase as specified by the “Concession Agreement” to cover these expenses was overtaken by political events following the then Opposition A Partnership for National Unity (APNU) and Alliance For Change (AFC) passing a motion to slash the Berbice Bridge tolls by half.
However, the APNU/AFC Government, inclusive of its Finance Minister Winston Jordan, is creating a perception that the Berbice Bridge Inc is “robbing” the Guyanese public and pumping millions of dollars in revenue into the pockets of its shareholders.
When contacted by Guyana Times, one of the shareholders found completely shocking the statements being made by the Government given the fact that the common shareholders did not receive any return on their investment.
Asked why they made this investment in 2006-2007, when even the model generated at the time showed that they would not be receiving any return on their investment for several years, a representative of one of the common shareholders replied, “At the time we were simply making a patriotic decision rather than just a business one.
“We felt that the Berbice Bridge was important not only to connect the people of Berbice to the rest of the country, but to also launch what we thought was an exciting new approach to building infrastructure: the Public-Private Partnership (PPP). Unfortunately, we have since been castigated as the “bad guys” even though we have received no returns on our investment.”

Toll reduction and bankruptcy
Against that backdrop, the BBCI is contending that the toll reductions, even with a subsidy provided by the Government, will see the Company operating at a loss and eventually plunge it into bankruptcy. Bond payments on the principal totalling another $500 million are due this year.
The Bridge Company is simply asking that before the Government imposes the reduction, it must honour the legally binding agreement between the Company and the Government to have tolls adjusted within specified timeframes to ensure the Company fulfils its obligations to its investors.
The Company had begun to repay the principal on its bonds in 2014; and this was going to be facilitated through the increase in tolls as was set out in the Toll Formula. However, because of the then Opposition’s successful move to slash the tolls by more than half in the 10th Parliament, it became infeasible to do so and as a result, the Company suffered even greater losses.
However, Government appears to not care about the cash flow woes of the Company. The Finance Minister already declared that the agreement was “unreasonable” and Government would not accept it.Despite the explanations proffered by the Company, the Minister is maintaining that the BBCI will not suffer any losses since the Government would pay the Company the difference between what is now charged and the reduced charge – in effect a subsidy to the commuters.
However, he did not address the concerns regarding the Company’s commitment to pay off its debts or to release dividends to its shareholders.
Debt and debt instruments investors include NIS and a veritable who’s who of the Guyanese financial world:  Demerara Bank; NBS; Scotiabank; Citizens Bank; Republic Bank; Guyana Bank for Trade and Industry (GBTI); Hand-in-Hand Trust Corporation Inc, Trust Co Guyana Ltd, Hand-in-Hand Mutual Life Insurance Co; North American Life Insurance Company Limited (Nalico) and North American Fire and General Insurance Company Limited (Nafico).
The Berbice Bridge is Guyana’s first PPP with the abovementioned  broad cross-section of the financial sector investing. In 2006, over $8 billion was invested in various financing instruments, such as bonds, subordinated debt, preference shares, and common shares.