(Trinidad Express) After five years and over TT$20 billion, the government is expected to soon exit CL Financial (CLF) with a full repayment of money spent on the conglomerate and its former illiquid insurance company, CLICO.
This could pave the way for former chairman Lawrence Duprey, should he choose to reclaim the remnants of his once powerful global conglomerate since he still owns a 30 per cent shareholding of CLF.
The exit has been on the cards for over a year, following repeated extensions of the Shareholders Agree-ment between Government and CLF, as both parties awaited the valuation of the Methanol Holdings (MHTL) shares by the International Court of Arbitration (ICC).
In September the ICC priced CLICO and CL Financial’s (CLF) combined 56.53 per cent shareholding of MHTL at US$1.175 billion (TT$7.485 billion) and on October 8, that sale was executed to its former minority shareholder, Consolidated Energy Ltd (CEL). CEL is a local holding company that combines the interests of Switzerland-registered Proman, Man Ferrostaal and Helm which had a 43.47 per cent stake in MHTL.
Now, both CLF and the United Shareholders Ltd (USL)—a subsidiary of CLF which represents the shareholders of the holdings company—have agreed to the sale of another of its assets, the Republic Bank shares.
In a July 4, 2013 Letter of Intent, addressed to the Ministry of Finance’s Permanent Secretary Vishnu Dhanpaul on the settlement of Government debt which the Sunday Express obtained, it was agreed that shares in in MHTL, Methanol Holdings International Ltd (MHIL) and shares in Republic Bank would be disposed of entirely.
“CLF is of the view that it suffered a loss as a result of the manner in which the RBL shares were sold (to capitalise the CLICO Investment Fund). In the circumstances, CLF proposes that subject to the determination of the merits of its claim, any such loss be treated as a credit for the benefit of CLF in the discharge of the Government debt,” the letter said.
In addition, CLF proposed to sell shareholding in Angostura Holdings Ltd, CL World Brands Ltd and Home Construction Ltd but it would keep at least a 51 per cent ownership interest in the companies.
“In addition, CLF proposes that the CLICO and British American Insurance Company (BAT) traditional insurance business be divested. CLF further claims that it is entitled to the benefit of a potential control premium reflecting the fact that at the time of the intervention by Government into the affairs of the CLF group of companies, which together held a majority interest in Republic Bank Ltd shares. CLF and Government have agreed that the matters of whether there is any entitlement to such a control premium should be determined by mediation, and the valuation of any such control premium should be the subject of a valuation to be conducted by a mutually accepted independent valuator, the results of which shall be binding on the parties,” the letter stated.
“CLF disputes the ownership of the beneficial interest by Colonial Life Insurance Company (CLICO) and CLICO Investment Bank Limited in some of the Assets. CLF may wish to pursue this dispute in the court of the divestment of the Assets and shall advise Government of its proposed action in this regard,” the letter stated.
In January 2009, Duprey approached the government for a bailout of his illiquid insurance company, CLICO. His empire, which comprised some 65 companies in 32 countries, was caught up in a perfect storm of economic collapse. Its asset-rich portfolio cloaked its cash-poor balance sheets.
Government’s intervention saw the revocation of subsidiary CLICO Inves-tment Bank’s licence, installing of new boards at CLICO and eventually CL Financial and immediate liquidity injection to meet investment annuities which had matured.