Republic Bank halts GuySuCo’s bond financing over misuse of funds
A commercial bank that played a critical role in negotiating a $30B bond facility to help finance capital works for the threeestate Guyana Sugar Corporation (GuySuCo) has halted any further disbursements.
The suspension is because of Republic Bank’s deep unhappiness with how the monies were used by GuySuCo. On September 18, last, Managing Director of Republic Bank (Guy) Limited, Richard Sammy, wrote Maurice John, General Manager of the HandinHand Trust Corporation. HandinHand had written to Republic Bank requesting that the purpose of the Trust Deed be changed regarding how the proceeds of the bond shall be applied. The bond was supposed to pay for improvements of GuySuCo’s operations at the three remaining estates Albion, Blairmont and Uitvlugt. However, the cashstrapped GuySuCo reportedly used part of the bond proceeds to repay interest on another debt at a commercial bank. The bond had strict rules how GuySuCo was supposed to collect and spend the monies. According to Sammy, while Republic Bank has no objection in principle to the proposed changes to the Trust Deed, it remains “extremely disappointed” that proceeds from the bond was utilized for a purpose other than what was approved. “The recitals of the Trust Deed referenced the exclusive purposes for which the net proceeds of the bond are to be used and this does not include repayment of financing cost and other debt servicing commitments to financial institutions,” Sammy wrote to HandinHand Trust. Republic Bank said that in light of the report that proceeds from the bond were utilized to partially an or fully settle interest on an outstanding GuySuCo debt with another financial institution, it will be registering a formal complaint.
The bank also demanded a full explanation as to the apparent breach of the terms of the Trust Deed. “Kindly note that the execution of the Trust Deed is being held in abeyance until the matter is satisfactorily addressed,” Sammy also announced. Government is under pressure with GuySuCo barely expect to make 100,000 tonnes of sugar this year, after making more than a 200,000 tonnes in 2015. (Kaieteur News)