Oct 2014 Financial News

TCL reviews finances and operations

Oct 21, 2014

Just weeks after the company defaulted on a loan, directors of Trinidad Cement Ltd (TCL) say they are negotiating a restructured loan agreement with their financiers.

The matter is addressed in a directors’ statement issued jointly by group chairman Wilfred Espinet and acting group CEO Alejandro Ramirez as part the company’s consolidated interim financial report for the nine months ended September 30.

They said it is part of a “comprehensive financial and operational review of the group” and a restructuring plan to secure TCL’s long-term viability is due to be completed by October 31.

The directors said: “In accordance with international financial reporting standards, the total principal outstanding has been reclassified to current liabilities in the consolidated statement of financial position.

“This has resulted in the group showing a net current liability of $1.5 billion compared to net current assets of $138 million at Q3 (third quarter) 2013.”

The company, based at Claxton Bay in Trinidad, failed to make debt payments on September 30. In a notice to stakeholders published the day before, TCL officials said all payments due under the existing restructured loan agreements had been placed on hold and company representatives had 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.’

Following that development, the company was downgraded by two international credit ratings agencies—Standards & Poors and Fitch Ratings.

However, there is some positive news in the company’s latest financial reports, which cover the nine months ended September 30. It shows that TCL recorded revenue growth of $97.2 million or 6.5 per cent. The company’s directors said in their statement that this was a continuation of a trend of improvement over the two preceding quarters of the year.

“This improvement was driven by growth in the domestic cement markets in Trinidad and Jamaica, whilst the Barbados market remained relatively flat,” they explained.

“In addition, concrete sales improved by 12.3 per cent. In Jamaica, Caribbean Cement Company Ltd (CCCL) was able to supply 80.3k tonnes of clinker (nil in 2013) to Venezuela under the PetroCaribe agreement. Price increases were implemented in Trinidad, Jamaica and Guyana.”

TCL’s operating profit before taxes increased by $31.3 million or 9.6 per cent but increased revenue was eroded by escalating costs in Jamaica due to the depreciation of that country’s dollar, as well as increased operating costs in Barbados.

“Net finance costs decreased by $29.7 million due to lower foreign exchange losses of $15.4 million and lower net interest cost of $14.3 million,” the directors said.

“Profit after taxes amounted to $63.7 million compared to $78.9 million—inclusive of one time tax credit of $37.7 million—in the prior year period which resulted in earnings per share of 24.4 cent compared with 28.2 cents for the prior year.”

The directors also reported on the discontinuation of operations of Premix and Precast Concrete Inc (Barbados), a subsidiary of Readymix West Indies Ltd (RML) with effect from September 30. They said this was due to “the prolonged operating losses at the location, resulting in a loss if $3.4 million for the quarter and $4.2 million for the nine months of 2014.”

Negotiations are in progress with the OIlfields Workers’ Trade Union (OWTU) with the aim of coming to an agreement on retroactive payments for their expired collective agreements, the directors said.

Source:
SUZANNE SHEPPARD
Trinidad Guardian, A18
Tuesday October 21, 2014