Dec 2014 Financial News

TCL to vote on 20% shareholding ceiling

Dec 30, 2014

Trinidad Cement Ltd yesterday announced that it was holding a special meeting of the company on January 22 to update shareholders on its restructuring plan and to consider the removal of the restriction on any single shareholder owning more than 20 per cent of the cement producer.

In a notice to its shareholders placed on the Stock Exchange Web site, TCL said the restriction on any shareholder owning more than 20 per cent of the company has “the potential to restrict the marketability of the shares and in so doing may undermine shareholder value.”

The notice also stated that the company was “in negotiations to restructure its current debt through a restructuring plan, which will include modifications to existing financing arrangements with its creditors as well as a proposed rights issue to recapitalize the company. “It is anticipated that the removal of the 20 per cent restriction will facilitate the successful implementation of the restructuring plan.”

The lifting of the 20 per cent restriction must be passed by a special resolution of shareholders with not less than 75 per cent of the votes cast voting for it at a duly called meeting. Speaking yesterday afternoon shortly after the notice was posted by the T&T Stock Exchange, TCL chairman Wilfred Espinet said the move to lift the 20 per cent restriction on shareholding in TCL was being done at the request of the company’s lenders. 

He said the lenders had previously made the request in 2012 when TCL—under its previous board—attempted to restructure the company’s debt. He said that the board, which was chaired by southern attorney Andy Bhajan and led by former chief executive Rollin Betrand was against the proposal to remove the 20 per cent restriction. 

Six directors on the previous board (Bhajan, Bertrand, Brian Young, Leonard Nurse, Carlos Hee Houng and Bevon Francis) resigned on August 19, hours before a special compulsory meeting of shareholders was due to vote on their removal. The August 19 meeting elected Wilfred Espinet, Alison Lewis, Christopher Dehring, Michael Hamel-Smith, Nigel Edwards, Francisco Aguilera and Carlos Palero as TCL directors. They joined Jean Michel Allard, Wayne Yip Choy and Alejandro Ramirez.

TCL’s largest shareholder, Cemex, now has three directors on the ten-member board: Aguilera, Palero and Ramirez. Cemex is TCL’s largest single shareholder with a 20 per cent stake in the company. TCL’s other major shareholders are Republic Bank Bank with 11.06 per cent, the National Insurance Board with 10.16 per cent and a company named Baleno Holdings, of which very little is known, with 8.21 per cent.

Lifting the 20 per cent restriction and then following that with a rights issue may lead to Cemex taking control of TCL, if all of the rights are not taken up by existing shareholders. Yesterday it was put to Espinet that if TCL shareholders do not take up their rights, they are opening the door to Cemex taking control of TCL. The TCL chairman agreed. “If they go beyond 30 per cent shareownership in TCL as a result of the rights issue, the takeover code mandates that Cemex will have to make a bid for all the outstanding shares of TCL,” said Espinet, quickly adding that it was not the intention of the TCL directors to sell the company.

It is proposed that the rights issue would raise $320 million (US$50 million), which is about 16 per cent of TCL’s total debt. TCL yesterday traded at a share price of $2.50 per share, which means at that price TCL would have to issue 128 million new shares to its shareholders to raise the $320 million. TCL currently has 249,765,136 shares in issue.

TCL announced on December 22 that it had signed a Memorandum of Agreement with the Oilfields Workers Trade Union (OWTU) involving $150 million in salary negotiations and the payment of backpay from 2009 to the end of 2014.

Source:
Trinidad Guardian
Tuesday December 30, 2015

http://www.guardian.co.tt/business/2014-12-30/tcl-vote-20-shareholding-ceiling