Oct 2014 Financial News

S&P downgrades TCL for debt default

Oct 07, 2014

Standard & Poor’s (S&P) credit rating agency has downgraded Trinidad Cement Ltd (TCL), after the company, based at Claxton Bay in Trinidad, failed to make debt payments on September 30.

“We are lowering our corporate credit rating on TCL to ‘D’ from ‘B,’” Mexico-based S&P analysts Fernanda Hernandez and Luis Manuel Martinez said in a rating released late Friday evening. 
With its ‘B’ rating, the Caribbean cement maker was already deemed “highly speculative” or five notches deep into “junk” but S&P has further downgraded the company which is now led by acting CEO Alejandro Ramirez, a Cemex executive. Mexico-based Cemex is the largest cement maker in the region.

Giving their rationale, the S&P analysts said: “The downgrade reflects TCL’s missed debt service payments due September 30, 2014. Such maturities are not subject to a grace period and we do not expect payment within five business days, which Standard & Poor’s considers an event of default as per its criteria. 
In addition, the downgrade reflects TCL’s September 29, 2014, notice to stakeholders, in which the company informs that all payments due under the existing restructured loan agreements would be placed on hold.”

In the September 29 notice to which S&P referred, TCL said company representatives met with “its lenders for the purpose of updating them on the present state of the company. PriceWaterhouseCoopers, which has been commissioned by the board to conduct the financial assessment of the company, presented its initial findings at the meeting.

“Subsequent to the meeting, the board of directors took a decision to place a hold on all payments due under the existing restructured loan agreements and proposed a ‘standstill.’ A comprehensive restructuring plan will be submitted by October 31, 2014, and will include actions to preserve the ongoing operations of the company, and to ensure its overall long-term viability.”

The downgrade is the latest problem for the cement company. On September 23, Group CEO Dr Rollin Bertrand, who had been suspended by TCL’s new board, was terminated. Bertrand, along with chairman Andy Bhajan, Carlos Hee Houng, Bevon Francis, Leonard Nurse and Brian Young, tendered their resignations minutes before a group of shareholders met to have them removed at a August 19 special compulsory meeting held at the Radisson Trinidad in Port-of-Spain. Although he resigned as director at the special meeting, Bertrand retained his position as CEO. Members of the new TCL board are businessman Wilfred Espinet, retired public servant Alison Lewis, Jamaican business executive Chris Dehring, attorney Glenn Hamel-Smith, UTC executive Nigel Edwards and Cemex executives Carlos Palero and Francisco Aguilera.

Source:
Aleem Khan
Trinidad Guardian
Tuesday October 7, 2014

http://www.guardian.co.tt/business/2014-10-07/sp-downgrades-tcl-debt-default