Ockfeeds share dilution decision to CCJ
APNU was simply rewarding Mr Badal by not defending the court matter and not appealing it to CCJ”, the release said before adding that one also can question why the State Assets Recovery Agency (SARA) is not investigating this matter.
According to the PPP, Badal engaged in numerous practices to the detriment of the state and minority shareholders. Among the examples listed were the incorporation of a company in Trinidad, with the exact same name—Guyana Stockfeeds which was used to conduct billions of dollars of transactions on behalf of the Guyana based company.
When NEOFI, an edible oil company, solely owned by Badal ran into financial trouble, it was the local company that bought over the asset thus bailing out the company owned 100% by Badal.
Reversal The PPP also cited the reversal of the sale of Popeyes from GSL to his own name for his own benefit and the failure of GSL to attract profits in keeping with the significant growth and new investments.
The PPP alleges that because of the dealings with related companies, these “lost” profits were likely enjoyed by companies owned or related to Badal.
The PPP then went on to explain why the dilution of GSL shares from 38% to 7% deprived the State of revenue
The press release explained that in October 1997, Badal bought 35% of the shares of GSL, costing approximately $650 per share. On a proportional basis, NICIL retained 38% with implied valuation of US$$980, 000 the press release pointed out.
In 2000, with sales and profit increasing significantly from 1997, the book value of each share was over $1000 but under the Rights Issue in year 2000, each share was sold for only $15.
“NICIL’s dilution from 38% to 7% that occurred in 2000 reduced its shareholding then by over US$1M. Today, this value is at least 5 times as much given that GSL sales has increased many times over”, the release said.
It added that NICIL made many arguments before the High Court, most importantly, that Badal had significantly underpriced the shares in his Rights Issue in year 2000 to the detriment of any minority shareholder who did not subscribe. Although the Rights Issue increased the number of shares by over 400%, only $35M Guyana dollars was raised.
According to the release, Badal’s stated reason for use of the funds, was to build a wharf on land owned by NICIL, for which permission had not been granted. “As such, the use of proceeds was for an illegal action or one where no permission existed. Mr. Badal acquired almost all remaining shares not subscribed for, at the heavily discounted price, thus personally benefitting from his action”, it was stated.
It was stated that in 2017, given the significance of the loss of shareholder value to the State flowing from the Appeal Court ruling, NICIL Directors ought to have referred the matter to the Caribbean Court of Justice (CCJ).
“This did not happen. One can only assume that given Mr. Badal’s influence as a significant political contributor and supporter, that the APNU+AFC administration looked the other way”, the release said.