GFC’s action threatens US$60M China loan

first_img… BaiShanLin affiliates made no promise tobring investors – Attorneyhe move by the Guyana Forestry Commission (GFC) to repossess concessions held by BaiShanLin International Forest Development Inc (BIFDI) has jeopardised a US$60 million loan to the company, and the matter has since attracted the attention of the Chinese Embassy in Guyana.The GFC on Tuesday announced that it was moving to repossess concessions held by BaiShanLin.Guyana Times has since been able to confirm too that the Forestry Commission had also in the previous week written to five companies affiliated with BaiShanLin, terminating the Timber Sales Agreements (TSAs) and Joint Ventures that the companies had effected with the Chinese-based logging company.BaiShanLin trucks laden with logs in the interiorBased on documentation seen by this publication, on September 1, 2016, the GFC wrote to the five companies with whom BaiShanLin had entered into Joint Ventures, informing them that the arrangement had been terminated, since the Commission had not been informed ahead of time of a transfer of shares.90 daysEach of the companies was told to remove any equipment it had on the more than 400,000 hectares of forest within 90 days.But Attorneys for BaiShanLin are preparing to challenge the actions of the Forestry Commission in the courts.BaiShanLin has since secured the services of Satram and Satram Law Firm and the Attorneys are now questioning the action taken against the five companies since none would have made or reneged on any commitments to the Government of Guyana or the Forestry Commission.Loan jeopardisedPratesh Satram spoke with Guyana Times on Wednesday and indicated that the US$60 million loan taken by the Chinese logging company from the China Development Bank (CDB) was now under threat, since the shares BaiShanLin would have acquired in the local companies had been used as security against the loan.This publication has since been told that meetings were being held in China with the Bank and other stakeholders to decide on a course of action in light of the move by the GFC, since “the loans were secured in part against the shares of those companies.”The matter has also engaged the attention of the Chinese Embassy in Georgetown, since it was approached for assistance by BaiShanLin.In fact, the Attorney this publication spoke with has questioned why the action was taken against these companies in the first place, since, according to the GFC in its public pronouncement — it is BaiShanLin that failed to produce an investor.According to Satram, none of the companies which had their Joint Ventures terminated with BaiShanLin had made any promises to the Government to produce any investor.According to letters issued to Haimorakabra Logging Co Inc, Kwebanna Wood Products Inc, Sherwood Forests Inc, Wood Association Industries Company and Puruni Woods, they had violated provisions in the Forestry Act when they failed to inform the Commission of a transfer of shares, hence the decision to terminate the arrangement.In one such letter addressed to Hongbo Chu, the Secretary of Sherwood Forests Inc and written by the GFC’s Corporate Secretary, Jacy Archibald, the Commission acknowledged that written approval had been given for a Joint Venture arrangement between Sherwood Forests and Hongbo Chu. “However, the GFC has unearthed that subsequent to the aforementioned approval, that you transferred the shares issued to the joint venture partner to BIFDI without prior consent.”According to the letter seen by Guyana Times, “The GFC, therefore, gives official notice that the TSA granted to Sherwood Forests Inc is revoked with immediate effect.”Similar letters were sent to each of the companies informing that the TSA had been revoked, since the GFC had not been informed of the shares transferred.BaiShanLin, over the years, would have utilised the concessions of its affiliates to extract and export logs since the State Forest Exploratory Permit (SFEP) it possesses does not allow the company to extract or export logs from those concessions.What debt?In making the announcement of repossession, the Commission said, “The decision came after the company failed to deliver on agreed actions to introduce investors to the Commission and having been given time to prove that it had an acceptable plan to clear an approximately GY$80 million debt.”“In keeping with Forest Governance Practices, the GFC will be formally repossessing the concessions owned by the company and accelerating efforts to recover the debt owed,” it declared.None of this, however, had been communicated to any of the five companies and according to the Attorney-at-Law that this publication spoke with, the GFC has not been formally responded to, but the matter would be vigorously defended in court.BIFDI was incorporated in September 2006 under the Guyana Companies Act 1991 with the main objective of timber harvesting and establishing downstream wood processing operations in Linden.To date, however, BIFDI has failed to fulfil many of its commitments to the Government of Guyana, reneging on the obligations it made, which were accepted in good faith, according to the GFC.last_img

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