Compromise reached on GUYMINE bonds
Guyana Chronicle
February 28, 2007
AN AGREEMENT between the government and Citizens Bank Inc. was concluded yesterday bringing an amicable closure to the bauxite bonds issue which was pending for years, the Finance Ministry reported.
Citizens Bank is the current registered holder of 18 government bonds denominated in both US dollars and Euros, with a current face value of US$21M and Euros 3.9M.
The bonds were originally issued by the Government of Guyana to creditors of GUYMINE (the former state-owned Guyana Mining Enterprise) on May 17, 1994 and subsequently acquired by Citizens Bank during the period July 2001 to December 2004, the ministry said.
Several investors, it noted, have participated through the bank in acquiring the bonds and own the rights to about 55% of the bonds denominated in US dollars and 98% in Euros.
It added that an agreement between both parties caters for the payment by the government of all outstanding interest on the bonds and the redemption of the bonds by the government at 90% of their face value.
The ministry said the government has offered to make an immediate cash payment of US$5M and for the remaining balance, issue a three-year debenture denominated in Guyana dollars with a variable interest rate equal to the average one-year Treasury Bills rate, and this has been accepted by the parties concerned.
The agreement was signed at the Office of the President with President Bharrt Jagdeo present.
The Government Information Agency (GINA) said Mr. Jagdeo explained that in resolving the issue, a balance had to be struck between meeting the expectations of international creditors and those who extended debt relief to Guyana.
“I think we have struck a good compromise and we (the government) have demonstrated to our international creditors that we sought comparable treatment at the same time (and) managed to satisfy to a great extent the expectations of our local stakeholders,” GINA quoted the President as saying.
It said the bonds matured last year and Mr. Jagdeo said it was important to note that the government also had international obligations to fulfil and it takes these seriously.
He said the bonds issue had to be taken seriously because it would have impacted on the health of the financial system and the pension grant for many entities.
Citizens Bank Chairman and Chairman of Banks DIH, Mr. Clifford Reis according to GINA, said: “We would like to say thank you to the government for the gracious way in which the negotiations were conducted. We have accepted this agreement in a fair and amicable way.”
He told the agency the agreement was approved when the bank’s shareholders met on September 17 last.
Deputy Finance Secretary in the Ministry of Finance, Ms. Lorene Baird and Managing Director of Citizens Bank, Mr. Allan Parris inked the agreement in the presence of President Jagdeo and Reis, GINA said.