VENTURES AFRICA – Guinea’s state resources company SOGUIPAMI and South Africa’s Palladino Capital have agreed pay back terms on a $25 million loan from the latter, Reuters reported the West African state’s finance minister confirm the development on Monday.
Palladino Capital, the British Virgin Island-registered arm of the South African investment firm Palladino, refuted claims by British newspaper Sunday Times that a default on the loan agreement would lead to the minerals-rich nation losing about 30 percent of its resources worth billions of dollars thereby jeopardising investments by firms such as Rio Tinto and UC Rusal.
On June 11 the company issued a statement claiming that the loan agreement contained “customary default provisions” but given the “limited cash resources of the government, it provided that in event of a default it could be repaid in cash and/or in kind”
“However such repayment cannot legally exceed the value of the debt due under the loan agreement and it can in no way result in the appropriation by our company of 30 percent of private or national assets worth billions of dollars,” the statement read.
According to Palladino, it had been forced to demand an immediate repayment of the loan on May 24 after numerous queries to the government over the destination of the funds went unanswered.
Responding to the development, Kerfala Yansane, the finance minister who signed the loan agreement on behalf of Guinea, said, in an SMS message to Reuters question, that: “SOGUIPAMI will reimburse the money in the coming days so as to end to the contract.”
Guinea relies on minerals for more than 70 percent of exports. The country is the world’s biggest shipper of bauxite and its iron ore, gold and diamond resources have been attracting investments.
However, investors are disturbed by the West African state’s history of disputes with major companies despite efforts by President Alpha Conde to ease investments with mining reforms and a new Mining Code.
The code stipulates in Article 150 that “The State reserves the right to sell all or part of its participation in cash, without pre-emption rights of other shareholders of the holder of the mining company, through a bidding process that is open and transparent.”