Nov 2009 Financial News

CL Financial, bondholders negotiate compromise

Nov 11, 2009

Lascelles deMercado's head office on Dominica Drive in New Kingston. CL Financial is in default on an account that secures a US$240 million bond, which helped pay for the acquisition of Lascelles in 2008.

CL Financial (CLF) has struck a new deal with its bondholders, allowing the troubled company another two months breathing room to restructure the terms of a margin account on which it has defaulted, according to newly appointed chief executive officer Steve Bideshi.

CL Financial was to have maintained a 150 per cent margin on a trust account held by RBTT in Trinidad, but fell below the floor in September, triggering a margin call to recollateralise the account either by paying over cash or shares in other assets of the group.

But Bideshi told Wednesday Business on Tuesday, that the company's creditors - holders of US$240 million in notes issued by CL Financial - have backed off of a two-week ultimatum to bring its CL Spirits Charge of Shares account back in line.

"We agreed with the lenders to have a new facility at the end of January 2010, so we are in Trinidad and in Jamaica on hold. We're in the process of redoing the transaction, doing something that can be compliant," Bideshi said.

He declined to spell out the company's options.

Options

RBTT Trust Limited, however, had demanded that the Trinidad conglomerate either wire cash of US$188.26 million to RBTT Bank Jamaica or pledge shares of equivalent value in either Republic Bank or Lascelles deMercado and Company, two profitable companies owned by the rescued CLF.

CL Spirits, incorporated in St Lucia, was the vehicle chiefly used by the then Lawrence Duprey-led CL Financial to buy a 86 per cent stake (92 per cent voting rights) in Lascelles in 2008.

Less than six months later, the overleveraged and illiquid CL Financial group collapsed.

Bideshi, who was hired by the Trinidad government to restructure the group, was elected to Lascelles' board on August 28, the same times as Shafeek Sultan-Khan's appointment as chairman.

On the broader restructuring programme under way of CL Financial, Bideshi said the organisation was still analysing all the companies in the group, whose interest span insurance, banking, energy and spirits.

Signed agreement

Trinidad in mid-June signed an agreement with CLF shareholders and directors to place the management and control of the assets of the company in the hands of a new board to save a number of its debt-burdened companies that were the subject of a rescue memorandum of understanding (MOU) in January.

The board comprises four government directors and three CLF directors including Chief Financial Officer Michael Carballo, a surviving member of the conglomerate's management team, to whom RBTT's September ultimatum was addressed.

The MOU provides a package of financial support from the government, with a number of conditions attached relating to the winding up of CLICO Investment Bank and the rationalisation of assets and liabilities of CLICO, and the British American Insurance Company (BAICO).

It requires that CLF dispose of its 55 per cent shareholdings in Republic Bank Limited, its 56.33 per cent in Methanol Holdings Limited (MHTL), Caribbean Money Market Brokers Limited and any other assets to repay the money the government will be providing during the restructuring.

Republic Bank on Tuesday reported net profit of just over TT$1 billion, but was worse off than a year ago when it made TT$1.3 billion. The drop in net profit resulted from a TT$446-milllion impairment loss on its loan portfolio.


Suorce:
business@gleanerjm.com
Jamaica Gleaner
Wednesday November 11, 2009

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