Feb 2015 Financial News

TCL shareholders lift 20% restriction - Cemex to invest more

Feb 10, 2015

Shareholders of Trinidad Cement (TCL), voting at a special meeting last night at the Hilton Trinidad in St Ann’s, approved a resolution lifting the company’s 20 per cent cap on shareholding by a margin of 91.4 per cent to 8.6 per cent.

The vote came at the end of the special meeting at which tempers nearly boiled over following an intervention by fired TCL chief executive, Rollin Bertrand, who called on the current chairman Wilfred Espinet to allow the shareholders to make contributions lasting more than three minutes.

Bertrand’s intervention ended when Espinet told him that he had had 26 years to make a difference at the Claxton Bay-headquartered company, which has subsidiaries in Barbados and Jamaica.

The vote by the TCL shareholders sets the stage for the financial restructuring of the cement producer’s $1.9 billion debt, as one of the preconditions of the restructuring exercise was the removal of the 20 per cent cap, said TCL director Nigel Edwards.

Another precondition is that the lenders’ amendments should be completed by April 30 in the first instance, with a 30-day extension possible, Edwards told over 200 TCL shareholders at the special meeting.

Edwards said another precondition of the restructuring was that the shareholders have to pump at least $320 million (US$50 million) into the company.

The TCL board on Friday passed a resolution to raise a maximum of $362 million (US$56.6 million) in new capital through a rights issue of 124,882,568 new shares at a price of $2.90 a share.

The TCL shareholders will be offered the right to purchase one new share for every two shares they hold.

The $2.90 rights issue price is a 24.5 per cent premium of TCL’s $2.33 share price as at the close of trading on Friday.

Edwards said that in order to guarantee the success of the rights issue, the board had agreed to implement what he described as a backstop shareholder agreement through which Cemex, TCL’s largest single shareholder at 20 per cent, would be able to acquire shares worth up to US$45 million in the rights issue.

The arrangement would limit Cemex to no more than a 40 per cent stake in the company after the rights issue. 

Edwards said in the event that Cemex does not get up to a 35 per cent stake in TCL through the rights issue, the board will arrange a private placement of shares for Cemex that will take the Mexican cement giant beyond 35 per cent.

He said the funds from the rights issue will be used to fund capital expenditure, pay overdue monies to the company’s employees, provide TCL with working capital and pay overdue suppliers.

If all of TCL’s shareholders subscribe for the 124.88 million shares being offered in the rights issue, the number of shares in issue by company will increase by 50 per cent from 249,765,136 to 374,647,704.

Source:
Anthony Wilson
Trinidad Guardian
Tuesday February 10, 2015

http://www.guardian.co.tt/news/2015-02-10/tcl-shareholders-lift-20-restriction-cemex-invest-more