Government has agreed to accept around $136,000 for the sale of National Industrial and Commercial Investments Limited’s (NICIL) shares in Guyana Stockfeeds Limited (GLS) to the entity’s Chief Executive Officer, Robert Badal, who is also the majority shareholder, State Minister Joseph Harmon disclosed on Friday.
“The offer to purchase the shares by Mr. Badal, the majority shareholder in Guyana Stockfeeds Inc was the only one received in response to two separate requests for proposals, the last being published in the four daily newspapers over the period October 29th to December 7th, 2017,” he said.
Speaking during a post-cabinet press briefing, Harmon told reporters that cabinet gave approval for the sale of the 6.7% or 5437 of ordinary shares that state holding company has in GSL. Badal he said will pay $25 per share.
Harmon told reporters that cabinet approved the sale of the shares as proposed and has authorized NICIL to complete the sale transaction.
In an advertisement published in the October 29th, 2017 edition of the Guyana Chronicle, it was indicated that interested persons must first register with NICIL and pay a registration fee of $10,000. They were then given an information memorandum on the company, guidelines for bidders and a draft share sale agreement among other documents.
Proposals, according to the ad were to be submitted to NICIL no later than December 7th, 2017 at 2 pm and addressed to NICIL.
The advertisement said that the company was incorporated on October 14, 1960 and is a listed company.
Earlier this year the People’s Progressive Party (PPP) criticized NICIL for not appealing a Guyana Court of Appeal decision on the share dilution by GSL in 2000 to the Caribbean Court of Justice.
It also accused Badal of involvement in practices which were detrimental to minority shareholders and the state but beneficial to him and the companies he was affiliated with.
In a press release, the PPP also took aim at Badal’s close relationship with the Alliance for Change (AFC) which is part of the governing coalition.
The release was a follow up to PPP General Secretary Bharrat Jagdeo’s comments about GSL shareholding held by NICIL and Badal’s response which was published subsequently in the Kaieteur News.
According to the release, Badal in the newspaper article spoke to the status of the court matter brought by NICIL against GSL on its 2000 Rights Issue and the 2008 decision of Justice Jainarine Singh which rendered the 2000 Rights Issue (and subsequent bonus issue) illegal, null and void.
The 2008 High Court decision returned NICIL shareholding to 38% from the diluted 7%. The release added that Badal in the newspaper article “contemptuously” argued that the High Court decision was tainted and influenced by the PPP administration and that the Appeal Court decision of 2017 validated the reduction of the NICIL shareholding from 38% before the Rights Issue and Bonus Issue to 7%.
According to the PPP, Badal engaged in numerous practices to the detriment of the state and minority shareholders. Among the examples listed were the incorporation of a company in Trinidad, with the exact same name—Guyana Stockfeeds which was used to conduct billions of dollars of transactions on behalf of the Guyana based company.
The PPP in the release sought to explain why the dilution of GSL shares from 38% to 7% deprived the State of revenue
The press release explained that in October 1997, Badal bought 35% of the shares of GSL, costing approximately $650 per share. On a proportional basis, NICIL retained 38% with implied valuation of US$$980, 000 the press release pointed out.
In 2000, with sales and profit increasing significantly from 1997, the book value of each share was over $1000 but under the Rights Issue in year 2000, each share was sold for only $15.
“NICIL’s dilution from 38% to 7% that occurred in 2000 reduced its shareholding then by over US$1M. Today, this value is at least 5 times as much given that GSL sales has increased many times over”, the release said.
Stabroek News was never able to reach Badal for a response to the allegations made.
