Citizens Bank and other creditors have agreed to accept US$5 million, and three-year government debentures to the total value of 90% of the bauxite bonds they now hold, following negotiations with government.
According to a Ministry of Finance press release issued through the Government Information Agency (GINA), the government and Citizen’s Bank Guyana Inc signed an agreement yesterday that will see the government paying 90% of the face value for the outstanding Guymine bonds which matured on May 17, 2006.
Citizen’s Bank is the current registered holder of the 18 government bonds valued at US$21,088,193.47 and 3,927,578.23 euros, originally issued by the government to creditors of the former bauxite company, Guyana Mining Enterprise Ltd, on May 17, 1994. The bonds were subsequently acquired by Citizen’s Bank from the creditors during the period July 2001 to December 2004.
Several investors, numbering some 15, sub-participated through Citizen’s Bank in acquiring the said bonds. These investors own the rights to approximately 59% of the bonds denominated in US dollars and approximately 98% of the bonds in euros, the release said.
Following months of negotiations, on January 12 the government made an offer to Citizen’s Bank that it would pay all outstanding interest due on the bonds and then redeem the bonds at 90% of their face value. Citizen’s Bank and the sub-participants agreed to accept the offer.
According to the release, payment will be by way of an immediate cash payout of US$5 million and the issue of a three-year government debenture in local currency with a variable interest rate equal to the average one-year Treasury Bill Rate (a little over 4%).
The government’s decision to default on the bonds last year had roiled the financial community. The government had later said it was seeking debt relief from the bondholders of up to 90% of the face value of the bonds. The current arrangement is virtually a complete reversal of that position.
