Globe Trust revamp plan filed with High Court
-shareholders have 30 days to appeal
By Nicosia Smith
Stabroek News
November 28, 2006
Globe Trust and Investment Company Limited (GTICL) has filed its US$3.5M Reorganization Plan with the High Court and shareholders have 30 days to appeal to the court if aggrieved after which the court is required to approve the plan or order compulsory liquidation.
On Friday the plan was filed in the court but the 30 days will begin from the first date of publication which was yesterday.
Hywhey Investment Inc., a company recently incorporated locally for the purpose of bidding for GTICL was given two weeks by the Bank of Guyana to make available US$3.5M - the amount needed to fund the plan. This deadline passed on November 3 and a reliable source has indicated that Hywhey Investment is seeking an extension. Hywhey's overseas shareholders who are backing this venture are involved in international commodity trading and brokerage; banking and mortgage broking; international financial brokerage and consultancy, manufacturing of health foods and visual arts and advertising.
"With regards to whether or not the stakeholders should be optimistic, I have always said and would still suggest that the stakeholders reserve their optimism until such time as the funding is received by GTICL," said GTICL Administrator Conrad Plummer in answering questions posed by Stabroek News yesterday.
The filing of the Reorganization Plan in the High Court was a fulfilment of the statutory and contractual duty of the Administrator since before GTICL could move ahead in line with the plan or even be liquidated the plan had to be filed.
"Should the Court approve the Plan, the Bank of Guyana or the Administrator must notify all depositors and other creditors 'who shall not receive full payment under the Plan,'" according to Plummer. If within 30 days of the Court's approval the plan is not refused by depositors in terms of number and value of deposits, the plan is deemed approved by the depositors.
On the other hand, if depositors and other creditors refuse the plan or when in the course of reorganization it appears to the Bank of Guyana or the administrator that circumstances render the plan inequitable or changes in its execution are desirable, the Bank of Guyana may apply to the courts to: (a) modify the Plan or (b) order compulsory liquidation of the company.
On October 28, portions of the plan were revealed by Plummer at a general meeting held with depositors at the Queen's College Auditorium. At that meeting only 71 of the 5,000 to 6,000 depositors attended and Stabroek News understands that around half of the depositors might have migrated. According to the plan, an immediate injection of US$3.5M will be made and US$1.5M would be for infrastructural works if necessary; the deposits will be re-adjusted to their July 2001 value, all deposits $50,000 and under will be activated and made available and those above $50,000 - 25% of the value will be converted to equity and all deposits will be activated within six to 36 months.
In terms of credit there will be a write-off of unrecoverable loans, the maintaining of debt recovery as a section of the credit function; concentration on new areas of lending; the building of an active portfolio and termination of all known arrangements giving rise to contingent liabilities, if deemed necessary.
Plummer had said at the October meeting that "a realistic estimate for a possible time frame of implementation would be three to four months after the receipt of the funding, provided that the investor resolves the funding and all of the outstanding issues with the Bank of Guyana."
As at December 31, 2005 the assets of the company were in the region of $868M with liabilities of $802M, but an analysis of the company's loan portfolio will cause those assets to be reduced to $221M, an amount which is insufficient to cover its debts.
GTICL lost $32.8M in 2005 compared to the $10M loss in 2004, according to its published financial statement for the period ending December 31st, 2005.
This two-year decline of the Trust follows a profit of $141,149 in 2003.
On October 31, 2005, the shareholders in recognition of the state of the company and the value of their shares, by resolution, reduced the stated capital of the company from $300M to $60M, a decrease of 80%, and in part to attract investors.