NICIL hop­ing for sale of sugar es­tates by early next year, Chair­man says -brief­ing held with in­vestors

-brief­ing held with in­vestors

Stabroek News Sunday - - FRONT PAGE -

With Price­wa­ter­house­Coop­ers (PwC) hav­ing com­pleted its val­u­a­tion of the four GuySuCo es­tates that are up for di­vest­ment and po­ten­tial bid­ders cur­rently analysing the find­ings, the Na­tional In­dus­trial and Com­mer­cial In­vest­ments Lim­ited (NICIL) is hop­ing that by the end of first quar­ter of 2019 all the es­tates would be sold.

“PwC has fin­ished their val­u­a­tion and the in­for­ma­tion mem­o­randa sold to in­ter­ested com­pa­nies, who now have up to Oc­to­ber 31st to sub­mit their bids,” Chair­man of NICIL Ho­race James told Sun­day Stabroek in an in­ter­view.

James said af­ter the dead­line for the sub­mis­sion, an eval­u­a­tion process would be un­der­taken. Af­ter the bids have been sub­mit­ted and eval­u­a­tions com­pleted, it will be Cabi­net that will make a fi­nal de­ci­sion. “PwC would give the score, be­cause they will use a scor­ing sys­tem for the busi­ness plans as they eval­u­ate them in terms of tech­ni­cal and fi­nan­cial as­pects and that sort of thing. They will look at the bids, score, make their eval­u­a­tion and rec­om­men­da­tions but we still have to sub­mit to Cabi­net,” James ex­plained, not­ing that Cabi­net will make a de­ci­sion on the in­for­ma­tion that PwC and the steer­ing com­mit­tee sub­mits.

“I hope we are talk­ing early next year. Yes, I hope by then [the end of Fe­bru­ary] that we would see them sold off,” he added, when asked about an ex­pected com­ple­tion date for the di­vest­ment process.

The dead­line for the pur­chase of the in­for­ma­tion mem­o­randa (IM), which be­came avail­able for pur­chase on Au­gust 15th at a cost of US$1,000, was last Fri­day. Buy­ers have an in­ter­ac­tive por­tal set up to as­sist them with clar­ity on the es­tates up for sale. The IM, also pre­pared by PwC, de­tails the as­set reg­istry and land in­ven­tory for each es­tate, NICIL has said.

Say­ing that the Guyana Sugar Cor­po­ra­tion (GuySuCo) was un­prof­itable, the APNU+AFC gov­ern­ment be­gan its re­struc­tur­ing of the com­pany at the end of 2016 with the clo­sure of the Wales Es­tate, which is among the four now on of­fer. The oth­ers are Skel­don, Rose Hall and En­more.

Gov­ern­ment has es­tab­lished a Spe­cial Pur­pose Unit (SPU) within NICIL to spear­head the di­vest­ment and pri­vati­sa­tion of the es­tates and other GuySuCo as­sets.

PwC, which was con­tracted by the SPU last year, be­gan do­ing val­u­a­tions of the as­sets of GuySuCo in or­der to se­cure prospec­tive in­vestors.

Gov­ern­ment has said that it has so far re­ceived over 70 Ex­pres­sions of In­ter­ests for the pur­chase of the es­tates from com­pa­nies around the world. Some com­pa­nies have sub­mit­ted ex­pres­sions out­lin­ing that they were in­ter­ested in buy­ing all of the es­tates.

‘Vir­tual room’

Fa­cil­i­tated by NICIL, the SPU and PwC on Wed­nes­day held an in­ter­ac­tive ses­sion for po­ten­tial in­vestors at the Mar­riott Ho­tel in Ge­orge­town.

How­ever, only about 17 com­pa­nies par­tic­i­pated at the ses­sion. James was not wor­ried about the num­ber since it did not nec­es­sar­ily re­flect those who would have pur­chased the in­for­ma­tion mem­o­ran­dum. He rea­soned that cost of travel to Guyana and the time avail­abil­ity for the one day event might have also been fac­tors.

James said, “We had a meet­ing for po­ten­tial in­vestors and if they [wanted] any clar­i­fi­ca­tions on the doc­u­ment, they could ask there. With the pur­chase of the doc­u­ment, those per­sons now have ac­cess to what we call a vir­tual room, a kind of li­brary where they can get all kinds of in­for­ma­tion. If ques­tions are asked by one com­pany, we give the an­swer to not only that com­pany but to all, with­out nam­ing who asked of course, so as to have it

open and make it clear to as much per­sons as pos­si­ble. The in­for­ma­tion mem­o­ran­dum it­self is to en­sure a trans­par­ent process.”

He added, “It was a good ses­sion and they had to sign a con­fi­den­tial­ity agree­ment when they [got] the in­for­ma­tion mem­o­ran­dum. We ex­plained the doc­u­ment, also the scor­ing sys­tem that will be used in the eval­u­a­tion and we had some ques­tions about that. We had good feedback from those who bought and this was done in an open pub­lic fo­rum where what­ever you give to one, you give to all and that is the same with the IM.”

No con­flict

In an ad­ver­tise­ment that NICIL has been run­ning for months to lure po­ten­tial buy­ers, it of­fered gen­eral in­for­ma­tion from the IM on the Skel­don, En­more and Rose Hall es­tates.

As it per­tains to the Skel­don Es­tate, high­lighted as one of its ma­jor fea­tures is “1,750 hectares of free­hold land, with 110,000 tonnes sugar ca­pac­ity.”

Ques­tions might be raised about the de­clared ca­pac­ity of 110,000 tonnes, which has never been met since the com­pany went into op­er­a­tion in 2009.

Con­tro­ver­sially built by Chi­nese com­pany CNTIC, the US$110 mil­lion Skel­don fac­tory never got any­where close to the an­nual fig­ure of 116,000 tonnes de­spite costly in­ter­ven­tions sev­eral years ago by a South African firm. The fail­ure to at­tain a grind­ing fig­ure of 350 tonnes of cane per hour and 116,000 tonnes of sugar per an­num put the then Bhar­rat Jagdeo ad­min­is­tra­tion un­der se­vere pres­sure and the sit­u­a­tion per­sisted all through the sub­se­quent Don­ald Ramo­tar ad­min­is­tra­tion and the first two years of the cur­rent David Granger ad­min­is­tra­tion, un­til the fac­tory was shut down at the end of last year for di­vest­ment/pri­vati­sa­tion.

The Skel­don fac­tory also had a high cost of pro­duc­tion of sugar – around US 40 cents per pound – which is far higher than world mar­ket prices.

The ad also says the fac­tory was “newly built,’ while not­ing that it was nine years old. Con­struc­tion started in 2005, which may ren­der the de­scrip­tion in­ac­cu­rate.

Other fea­tures of the Skel­don es­tate ad­ver­tised are its wa­ter treat­ment, co­gen­er­a­tion and diesel plants, in­ven­to­ries, equip­ment and rolling stock. The ad also cites a long-term lease ten­ure, ini­tially 25 years, for 11,900 hectares of cul­ti­vated lands with an op­tion to re­new.

It also cited fields in 10hectare plots, ac­cess to a well-es­tab­lished re­search fa­cil­ity and nurs­ery with sev­eral cane va­ri­eties, 70% mech­a­ni­sa­tion from me­chan­i­cal tillage/plant­ing to har­vest and a lo­cal pool of ex­pe­ri­enced fac­tory man­age­ment and a welle­d­u­cated work force.

For the En­more Es­tate, it says that pri­vati­sa­tion cov­ers 25 acres of free­hold land, with 60,000 tonnes sugar ca­pac­ity, a sugar pack­ag­ing house and ware­houses. It also has in­ven­to­ries, equip­ment and rolling stock. Fur­ther­more, there is a long-term lease ten­ure – ini­tially 25 years – of 6,900 hectares of arable lands with the op­tion to re­new.

With re­gards to the Rose Hall sugar es­tate, the IM high­lights the 5,650 hectares of free­hold land, with a 37,100 tonnes sugar ca­pac­ity fac­tory.

Al­though lease­hold lands are listed as part of all of the es­tates’ as­sets, James made it clear that those state lands would not be sold by NICIL as the Guyana Lands and Sur­veys Com­mis­sion (GL&SC) is re­spon­si­ble for their dis­tri­bu­tion, ac­cord­ing to the law.

He said NICIL is work­ing with the GL&SC to en­sure that the law is not breached dur­ing the di­vest­ment ar­range­ment. “There will be no con­flict be­cause we are work­ing with them. We have to work with them be­cause it is the rules; state land is state land. We have to iden­tify what is state land and what is GuySuCo land and then we deal with that ac­cord­ingly,” he added.

Ho­race James

James Pat­ter­son

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