Citizen Bank Guyana Ltd’s shareholders yesterday agreed to accept the government’s offer to pay 90% of the face value for the outstanding Guymine bonds, according to a reliable source.
The government’s final offer was made at a meeting on January 12 with Citizen Bank and the 15 sub-participants, following an agreed-upon effective date of settlement on January 31.
Yesterday morning, at the shareholders’ meeting at Georgetown Club some 98% of the shareholders give the thumbs up to the offer.
The government’s resolution of this matter came almost a year after it defaulted on the bonds and sought Paris Club debt relief terms up to 90% on the face value of the bonds which are US$21,088,193,47 and euro 3,927,587,23. The deal was a virtual about-face after Citizen moved to the courts.
In the first week of June last year Citizen Bank sued the government for defaulting on the 12-year US$21M and four million euros bauxite bonds issued in 1994, and which matured on May 17, 2006.
The government has agreed to pay the same 5% interest for two periods on the face value of the bonds and not on the discounted sum. For example, interest will be paid up to the time the bonds matured and then up to the date of settlement. The bonds matured on May 17, 2006 and interest in this instance will be paid from January 1, 2006 to May 17, 2006 and then from May 18, 2006 to January 31, 2007 the effective settlement date.
The government’s last interest payment on the bonds was on December 31, 2005.
The sub-participants include Hand in Hand Trust; Hand in Hand Life; several pensions managed by Hand in Hand; Demerara Bank; the GT&T pension fund; the Guyana & Trinidad Mutual Fire; GCIS and several individuals.
Stabroek News also understands that the redemption of the 90% face value of the bonds is to be done in the following manner: an immediate cash payment of US$5M to be applied proportionately across all bonds.
In addition, a three-year government of Guyana debenture denominated in Guyana dollars is to be issued for the balance plus the outstanding interest.
This instrument is expected to attract a rate comparable to the usual Treasury Bill Rate (the current one-year rate is 4.24%).
The applicable conversion rate for the US dollars to the Guyana dollar is to be determined using the official Bank of Guyana rate, this newspaper understands. (Nicosia Smith)
