By LCN Business Desk
Guyana's national pension scheme is a creditor of the company that built the Berbice River crossing, in three different ways at once, and two of the three carry dates that have arrived.
Note 8 of the National Insurance Scheme's 2023 annual report sets out the holdings and the terms attached to each.
What does the Scheme hold?
Ordinary shares, redeemable preference shares and subordinated loan stock, G$906.5 million between them.
| Berbice Bridge Company Inc | 2022 | 2023 |
|---|---|---|
| Ordinary shares | 80,000 | 80,000 |
| Redeemable preference shares, 11 per cent | 693,500 | 541,500 |
| Subordinated loan stock, 11 per cent | 365,000 | 285,000 |
| Total | 1,138,500 | 906,500 |
G$000. Source: National Insurance Scheme, Annual Report 2023, note 8. The ordinary shares are carried at cost at both dates.
The two debt instruments fell during 2023, the preference shares by G$152 million and the loan stock by G$80 million. The ordinary shares did not move.
When do they fall due?
The preference shares on 25 August 2026. The loan stock no later than five months after 31 July 2026.
The report gives both dates in terms. Of the preference shares it says, "The maturity date of the preference share is the 25 August, 2026." Of the loan stock it says it is "due to be repaid or redeemed not later than five (5) months after 31 July, 2026 which date is referred to as the maturity date."
Five months after 31 July 2026 is 31 December 2026. So one date passed in August and the other closes the year.
Both instruments carry 11 per cent. The loan stock has paid "interest at the rate of 11% per annum on the said stock in each and every calendar year commencing from December 2006", and unpaid interest rolls forward at an extra 1 per cent. The preference shares earn 11 per cent from December 2015 with the same 1 per cent penalty on default.
Is the loan stock secured?
The report says both, on facing pages.
Note 8(d) states plainly: "The subordinated loan stock is unsecured." The table of significant investments that follows lists "Berbice Bridge Company Inc, Loan of 11.0% (secured)", and marks the preference shares unsecured.
The same document therefore describes the same G$285 million instrument as unsecured in the note that explains it and as secured in the table that summarises it. Nothing else in the report reconciles the two.
What happened to these holdings before?
Two of the three were written off in 2015 and written back in 2022.
The report records that the ordinary shares "were impaired in 2015 based on advice received from an independent valuator", that the impairment was taken as an expense that year, and that "in 2023 dividends were received for this investment and as such this investment was written back on the statement of financial position as at 31 December, 2022."
The preference shares followed the same path. They "were impaired as at the 31 December, 2015 based on advice from an independent valuator" and "during the year 2022, this investment was written back in full".
So a holding an independent valuator advised writing off in 2015 was restored to the balance sheet seven years later, and a dividend in 2023 is the reason the report gives for restoring the ordinary shares.
What does a contributor take from this?
That the newest published account of this money is three years old.
The 2023 annual report is the most recent the Scheme has published. It shows G$906.5 million of Berbice Bridge paper on the books, with G$826.5 million of that in instruments whose maturity dates both fall in 2026.
The Scheme's investments totalled G$31,774,154,000 at the end of 2023, so the Berbice Bridge holding is 2.9 per cent of them. The fund itself fell G$4.764 billion that year despite collecting G$2.684 billion more than it paid out. What the fund carries it at now, and whether the August date was met, are not in any document the Scheme has published.
The entities
- National Insurance Scheme is Guyana's social security scheme and the holder of the instruments. - Berbice Bridge Company Inc is the issuer of the ordinary shares, preference shares and subordinated loan stock. - Annual Report 2023 is the newest report the Scheme has published. - Note 8 is the investments note setting out the holdings and terms.
What the title card says
- Headline: Guyana's pension scheme holds G$906.5 million of Berbice Bridge paper, one instrument matured in August and the other falls due by December. - Ordinary shares: G$80,000,000, unchanged in 2023. - Redeemable preference shares: G$541,500,000, down from G$693,500,000. - Subordinated loan stock: G$285,000,000, down from G$365,000,000. - Rate on both debt instruments: 11 per cent, with 1 per cent added on unpaid interest. - Preference share maturity: 25 August 2026. - Loan stock maturity: no later than five months after 31 July 2026. - Share of the Scheme's investments: 2.9 per cent of G$31,774,154,000.
Frequently Asked Questions
How much Berbice Bridge paper does the Scheme hold?
G$906.5 million at 31 December 2023: G$80 million of ordinary shares, G$541.5 million of redeemable preference shares and G$285 million of subordinated loan stock.
When does it mature?
The preference shares matured on 25 August 2026. The subordinated loan stock is due no later than five months after 31 July 2026.
What rate does it carry?
11 per cent on both debt instruments, with a further 1 per cent payable on interest that goes unpaid.
Is the loan secured?
The report says both. Note 8(d) calls the subordinated loan stock unsecured; the significant investments table lists the same loan as secured.
Were these holdings ever written off?
Yes. The ordinary shares and the preference shares were impaired in 2015 on an independent valuator's advice and written back in 2022.