News24

Guinea to pay back $25m Palladino loan

2012-06-20 15:45

Conakry - Guinea's state resources company Soguipami will pay back a $25m loan agreed with investment company Palladino Capital, the West African state's finance minister said on Monday.

South Africa's Palladino last week denied a report by British newspaper Sunday Times that default on the loan would lead to the minerals-rich nation losing about 30% of its resources worth billions of dollars - jeopardising investments by firms such as Rio Tinto and UC Rusal.

Kerfala Yansane, one of two ministers who last year signed the loan agreement on behalf of Guinea, responded to a Reuters question via an SMS message saying: "Soguipami will reimburse the money in the coming days so as to end to the contract."

Guinea, which relies on minerals for more than 70% of exports, is the world's biggest shipper of bauxite and its iron ore, gold and diamond resources are attracting investments.

Yet investors are increasingly worried by Guinea's history of disputes with major companies despite efforts by President Alpha Conde to ease investments with mining reforms and a new mining code.

Palladino Capital is the British Virgin Island-registered arm of the South African investment firm Palladino, which issued a statement on June 11 refuting the Sunday Times report.

"The loan agreement contains 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," the company said in the statement.

"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% of private or national assets worth billions of dollars," it said.

Palladino said it had been forced to demand an immediate repayment of the loan on May 24 after numerous queries to the government of Guinea over the destination of the funds went unanswered.