Aug 2010 Financial News

NEL unable to recover $5m CIB investment

Aug 13, 2010

Holding company National Enterprises Ltd has not been able to recover a $5 million investment it made in CLICO Investment Bank, part of the struggling CL Financial group.

A few shareholders were upset yesterday that NEL increased its administrative expenses in its financial year ended March 2010 from $39.6 million in 2009 to $45 million.

The concern was raised by minority stockholders during NEL's annual general meeting at the Crowne Plaza Hotel, Port of Spain yesterday.

The meeting followed a challenging year for NEL and its shareholders as the company's profits fell by $347.4 million or 44.4 per cent in 2010 from 2009, chairman Jerry Hospedales said in NEL's financial statements.

NEL's net profit for the year fell $774 million in 2009 to $444.5 million for its year ended 2010.

Its profit declined because of lower oil, natural gas and ammonia prices in investee companies NGC LNG, NGC NGL and Tringen while telecoms provider TSTT also provided $92 million less in profits because it was consolidating operations and making technology changes in a competitive environment.

At the meeting yesterday shareholder Kenneth Subran and others asked Hospedales about the $5 million investment and why it was made if it was "public knowledge" that CLICO and CL Financial were in trouble even before they approached the government for a financial rescue in 2009.

Hospedales said the investment was made in CIB in 2005 and at that time, there was no indication of any financial problems in the CL group.

He said the $5 million was in the form of an investment credit note and not a deposit and this note did not automatically qualify for deposit insurance.

This was why NEL had not recovered it yet and made a provision for it in its accounts, he said.

He said discussions were still being held about if it would qualify for deposit insurance, adding that the investment had been transferred to State bank First Citizens when it took over the operations of CIB.

Several directors appointed by the previous government resigned from the NEL board.

Government is expected to appoint directors shortly.

Three institutional investor nominees were reelected directors at the company's AGM. They are Boyer Jaggassar, Ross Alexander and Derwin Howell.

They joined chairman Hospedales and Leroy Mayers who are still on the board.


Source:
By Curtis Rampersad
Business Editor
Trinidad Express
Friday August 13, 2010

http://www.trinidadexpress.com/business/NEL_unable_to_recover__5m_CIB_investment.html