Bauxite Bonds issue…
Govt. to make immediate US$5M payout to Citizens Bank
Kaieteur News
February 23, 2007
Government has agreed to an immediate cash payment of US$5 million and thereafter to issue a three-year Government of Guyana debenture denominated in local currency for the remainder of the bonds held by Citizens Bank and other holders.
The debentures would attract an interest rate of 4.2 per cent per annum, which is the existing rate paid on Government debentures.
The bonds were initially issued by the government to creditors of the former local bauxite company, Guymine.
Citizens Bank held 18 of the bonds of which 16 were denominated in United States dollars to the value of $21.08 million; the other two were in Euros to the value of nearly four million euros.
Investors in Citizens Bank held 59 per cent of the bonds denominated in US dollars and some 98 per cent of the bonds denominated in Euros. Most of these bonds matured on May 17, last year. Only one was scheduled to mature on May 17 this year.
At maturity, the government declared that it could not honour the bonds because of a Paris Club agreement. This decision caused the holders of the bonds to move to the courts. Since then, the government has agreed to redeem the bonds but at only 90 per cent of their face value. However, the government kept paying interest on the bonds at the rate of six per cent.
In the wake of the declaration that it could not honour the bonds, Government entered into negotiations with the holders of the bonds and earlier this year, it agreed to honour the bonds.
Included in the agreement is the payment by the government of outstanding interest due on May 17, 2006; the payment of a five per cent interest on the outstanding face value of the bonds from May 18, 2006 to the settlement date of the redemption of the bonds.
Yesterday the various holders of the bonds met with their respective shareholders to seek agreement on the terms of the government offer.
According to reports, the shareholders unanimously approved the agreement paving the way for the holders to sign the agreement with the government.