(Trinidad Express) There could be another financial bailout on the cards for the T&T Government.
Four years after Government intervened in Lawrence Duprey’s failed insurance company, CLICO, it is now considering acquiring the shares of CLICO’s parent company, CL Financial (CLF).
CLF, which was once chaired by Duprey, is owned by shareholders.
At least 70 per cent is owned by a group called United Shareholders Ltd, headed by Kirk Carpenter and Roger Duprey.
The remaining shares are owned by Duprey.
In a bid to recoup its TT$24 billion investment to save CLICO, Finance Minister Larry Howai has said the Government is considering acquiring the shares.
This time around, though, Government will probably pay only a pittance. “We can purchase the shares for whatever they may be worth. I am assuming they won’t be worth much, and then we run the company legally, as opposed to a partial owner,” he told the Sunday Express in an interview last week.
He admitted this was one of the options the Government was considering as part of its overall exit strategy from CL Financial and CLICO by June, when the six-month extension to the Shareholders Agreement expires.
The other options, he said, would be to appoint a receiver to recover sums owed, or to exit the company with a loan-like arrangement for specific sums to be paid with interest monthly, backed by certain securities.
If Government does exit CLF, it stands to lose TT$7 billion to TT$10 billion of the money it invested, he said.
“If the Government exits, would that mean that Mr Duprey could come back as CLF chairman?” asked the Sunday Express.
“I don’t think that would be something we would want to see. It is very remote. I can’t see Mr Duprey being involved in the operations of the company on a day-to-day basis going forward. The Government is very clear on that. That will not happen,” stated Howai.
The Central Bank has initiated civil proceedings against Duprey and his chief financial officer, Andre Monteil, while the Director of Public Prosecutions has forwarded material to the Trinidad and Tobago Police Service to begin possible fraud-related investigations.
Duprey has also not appeared before the public commission of enquiry into the collapse of five of the companies he chaired.
But given the quantum of Government’s investment and the debt CLF companies owe, the Sunday Express understands Government is leaning toward acquiring the company as an option to recoup its investment.
But Howai would only concede: “We are in pretty dedicated and protracted negotiations to get to a point to determine which option to utilise.”
The Sunday Express understands that it was for this reason the sale of Home Construction Ltd (HCL) malls Valpark Shopping Plaza, Atlantic Plaza and the company’s hotel, Holiday Inn, was recently put on hold. The sale was being conducted by Ernst and Young on behalf of HCL.
HCL had contracted Ernst and Young to conduct the sale to select companies and individuals.
The Sunday Express was told it was Prime Minister Kamla Persad-Bissessar who intervened to stop the potential sale of assets when the news became public in an exclusive Express story.
Howai explained: “It is very clear the whole issue of disposal has to be properly managed as we go forward.”
“In going through the process, we need to make sure we are getting the best price,” he added.
He said it was the CLF board, chaired by the Government representative Gerald Yetming, that took its own decision on how the process should proceed.
For his part, he said he does not micro-manage the board.
“The Government was advised based on a discussion between the Government and CL directors. They would have looked at the values and the funds they needed to generate based on their loan balances. In addition to the Government, they are also owing financial institutions, so they will have to liquidate some assets to pay loans,” he explained.
Howai, who admitted he inherited things at the Ministry which he wished could have been done differently, explained that while the sale did have the appearance of a “fire sale”, it was not.
He said a claim has been made to both CLICO and CLF, to a sum of about TT$24 billion.
“We remain hopeful we can recover a substantial amount. At this stage, we are doing new valuations, as there’s been some recovery in prices,” he said.
Asked if CLF and CLICO were making money, Howai explained: “If you exclude interest and exclude the losses on the sale of assets and so on, you may get a composition where you’re making a small return. But you can’t look at that figure alone without context. CLICO is not making money right now.”
That situation could change with a judgment on the Methanol Holdings arbitration expected at the end of this month.
Howai said CLICO’s re-branding was still ongoing. The company will be called Atrius and operational by mid-year. “There are several administrative things to be done. A formal board will have to be appointed,” he said.
