Mar 2015 Financial News

CL Financial’s debt to First Citizens still unpaid

Mar 06, 2015

Activist shareholder Peter Permell yesterday called on the board of state-owned First Citizens to clarify how it plans to recover CL Financial’s unserviced multi-million-dollar debt, owed since 2009. Taking the floor at the bank’s annual shareholders meeting at the Ballroom of the Hilton Hotel and Conference Centre in St Ann’s, Permell noted that loans and receivables due to CL Financial and its affiliates, which had not yet been claimed under the liquidity support agreement (LSA), amounted to $198.2 million and US$96.5 million respectively as at September 30, 2014.

The LSA was a tripartite deal struck between the Central Bank, the debtor and the creditor. Interest accumulated on the amount outstanding, however, was not reflected in the statement. The auditor’s reported stated: Interest continues to accrue on these amounts. We continue to negotiate payment of these liabilities with CL Financial Limited. CL Financial Limited has requested an extension to December 30, 2014, to propose a repayment plan.”

However, according clause 5 (iii) of the LSA, the bank has until May 15, 2015 to claim losses for CL Financial Limited and its affiliates. If CL Financial Limited is unable to settle outstanding debt in full by March 15, the bank will submit a claim under the LSA for the total amount due at that time.  

Jason Julian, deputy chief executive officer for operations at First Citizens, said in response to Permell’s queris: “We are in a process right now where the different parties are negotiating. As you would recall from media reports, CL Financial would have sold a couple assets well during that period of time, so they now have cash coming to them. 

“Wre in the process of working out how do we get to the final end of this? It’s a very large number and relatively, it has come down tremendously. Where we are right now is where we are working out with CL Financial, do they fully repay the facility or do we give them an extra period of time. Parallel to that exercise is negotiating with the Government to extend the debt even further.”

Julian added: “CL Financial Group, as you would imagine, isn’t a simple entity. You have Angostura, you would have Home Construction, you would have Clico/British American and each has it own different strengths. So in the case of Angostura, Angostura is a viable enterprise. I think over the Christmas time, some of us may have enjoyed some of their products, so Angostura would be very different from Clico, or even British American. 

“Wen we talk about the claim, we are talking of that part of the exposure that we inherited, which clearly could not be recovered, versus Angostura from which we would have been receiving healthy payments over time. Those parts of the $1.8 billion exposure which after all our efforts, and after all the negotiations, we could not get satisfaction on the repayment, we then would have relied on the LSA to get part of the debt satisfied.”

The bank’s annual report shows a profit before tax that increased by 3.7 per cent from $744.7 million in 2013 to $772.6 million at the end of 2014. Profit after tax amounted to $626.6 million—2.9 per cent growth year-on-year. First Citizens’ total assets amounted to $34.9 billion and its capital base increased by 4.7 per cent from $5.96 billion in 2013 to $6.24 billion last year.

Source:
Sean Nero
Trinidad Guardian
Friday March 6, 2015

http://www.guardian.co.tt/business/2015-03-06/cl-financial%E2%80%99s-debt-first-citizens-still-unpaid