(Trinidad Express) Some four and a half years after Government took charge, CL Financial (CLF) is to return to shareholders, but not to the perceived wrong-doers who were there when the company went belly-up.
This according to the framework for a new agreement between Government and the financial giant, a copy of which was obtained by the Express.
The framework for the new agreement is currently being considered by the Cabinet, but most significantly, Government, or rather the taxpayer, would recover every cent of the TT$23.3 billion it put into rescuing the company.
CLF chairman Gerald Yetming, while not wanting to say anything about the framework until discussions were complete, stressed yesterday the taxpayers would get back every cent.
The framework for the new agreement, which takes the form of a “letter of intent”, states none of the directors or executives of CL Financial Ltd, its subsidiaries and affiliates who held office before January 31, 2009, shall be eligible to be appointed a member of the board of CLF and/or its subsidiaries “without the consent of the Government of Trinidad and Tobago”.
That would isolate Lawrence Duprey, Andre Monteil, Gita Sakal, Michael Anthony Fifi and others who held important positions at the time when CLF approached Government for a financial bailout and a memorandum of understanding was signed. That MOU provided for Government to nominate four of seven directors of CLF.
The framework for the new agreement proposes that Government shall be entitled to appoint three persons on the seven-member board. Government would therefore be surrendering governance control of the institution.
The framework identifies the following assets for settlement of the Government debt: shareholding in Methanol Holdings (Trinidad) Ltd, Methanol Holdings International Ltd, Republic Bank Ltd, Angostura Holdings Ltd, CL World Brands Ltd and Home Construction Ltd. The letter of intent proposes that all the shares in Methanol Holdings (Trinidad) Ltd; Methanol Holdings International Ltd and Republic Bank Ltd be disposed of “entirely”. It recommends however that CLF keep “at least 51 per cent ownership interest” in Angostura, CL World Brands Ltd and Home Construction Ltd.
Told there was a view the company might not be able to repay its debt to Government, Yetming stressed: “On the basis of the current valuations on the main assets, including Methanol and Republic Bank and other companies, including shares in OCM (in which CLICO owns 30 per cent), Government is getting back every cent it put in CL Financial. He said unless the valuations of those things drop because of some disaster in the world, then Government would not be fully repaid. He added some valuations and certain things were in “minor dispute” but the framework would allow the Government to get back every cent.”
The shareholders’ agreement (which was first established in June 2009) was extended three times and expires tomorrow. The expectation was the new agreement would have been crafted and signed in time for a 30-day extension of the “old” agreement to give Cabinet time to examine the terms and conditions of the new framework for an agreement. This means the Government will relinquish control on August 25.
The company had scheduled its annual general meeting in anticipation of a decision being made on the issue, but this meeting would have to be adjourned.
For the insurance business, the plan is the portfolio of good business was to be transferred to Atrius, which would be run as an insurance company. That business would not be part of CLF. “That is gone. The shareholders acknowledge that that doesn’t belong to them anymore,” a source said, adding CLF would not be in the insurance business anymore.
The source added the proposal was that the Government would either own Atrius or an insurance business might purchase it. The source added the problem (with Government ownership) was that in order to capitalise that company, they would need to inject TT$2 billion, and it was not clear whether Government would want to do this.
Finance Minister Larry Howai told the Express on Monday that Cabinet was still considering the terms and conditions of the new agreement. “We are still in discussions on it. I wouldn’t want to compromise that. We are getting close to the end. As soon as we have a decision, we would communicate it,” he said. It is understood that the matter has gone before the Finance and General Purposes Committee twice and went to Cabinet last Thursday.
Financial sources however stressed it was very critical that Government and the CLF shareholders come to a peaceful settlement. “This must be handled delicately, properly and peacefully,” a source stated. Sources said if there is no peaceful agreement and the Government has to move to liquidate CLICO and CL Financial, there would be considerable negative consequences for the economy.
“In the interest of the economy, you don’t want a dogfight,” another source stated, adding the break-up value would result in lower asset prices and in Government’s failure to recoup its investment.
“If there is a fire sale, Government would get firesale prices,” the source noted. Furthermore, sources said, this would have serious implications for institutions like First Citizens and the Unit Trust Corporation, which loaned huge sums to companies which formed part of the CLF empire.
Policyholders Group gets
all-clear to attend AGM
The CL Financial conglomerate will hold its annual general meeting today at 5 p.m., at the CLICO Box, Queen’s Park Oval, Port of Spain.
A notice to shareholders from the group’s corporate secretary, Jennifer Frederick, from CL Financial’s St Clair office yesterday, indicated the meeting’s ordinary business today will entail an update on the financial position of the company and the approval of a new shareholders’ agreement with the Government.
The Clico Policyholders Group (CPG) said yesterday it received the “all-clear” after consulting with its attorneys to attend the CL Financial meeting.
CPG chairman Peter Permell said in a statement: “Having regard to the agenda, the CPG is persuaded that it is important for us and in the public’s interest to have a physical presence at this meeting in order to hear first-hand the long- overdue ‘update on the financial position of CLF’ and the details of the ‘new shareholders’ agreement’ between CLF and the Government of the Republic of Trinidad and Tobago (GORTT) going forward.”
He added: “It should be noted that it’s now almost five years since the GORTT’s intervention into CLICO and CLF, however, despite numerous requests by the CPG and others, including the one made by Mr Afra Raymond under the Freedom of Information Act, the 2008, 2009, 2010, 2011 and 2012 audited financial statements have to date not been made available to the public and as such remain a mystery.”
