Jun 2016 Financial News

Central Bank receives Angostura valuation

Jun 28, 2016

The Central Bank has received independent valuations of Angostura Holdings Ltd and CL World Brands Ltd which have been earmarked for “transfer or monetisation” under the institution’s resolution plan for Clico.

This was disclosed in the Central Bank’s March 2016 progress report on the restructuring of Clico, British American (T’dad) and Clico Investment Bank (CIB) which was laid in Parliament last Friday. The report was refered to the Public Accounts Committee.

The progress report also stated that the CBTT had begun consultations with the Finance Minister on the valuation of the three companies.

A resolution plan for Clico and BAT was first published in March 2015 by Bank. It also involves phased payments to Clico policyholders and creditors from the monetisation of Clico assets.

A November 8, 2015 update of the plan, published on the Central Bank’s website, indicated that in the first phase, the government was due to receive an 85 per cent payout of its $7 billion claim on Clico’s statutory fund.

That payment comprised $4.2 billion in cash, which the government received last year with the balance of around $3 billion to be settled upon the transfer to government of Clico’s shares in three of Clico’s assets: Angostura Holdings Limited (AHL), CL World Brands (CLWB) and Home Construction Limited (HCL). Clico’s shares in the three companies have not been transferred to the government as yet.

Also receiving monies from the insurance company last year were some 1,700 policyholders who held Clico and British American Short Term Investment Products (STIPs), but opted not to take up Government’s offer to be paid their money through Government bonds and shares in the CLICO Investment Fund.

The Privy Council is due to deliver judgment today on a matter brought by some of those investors in the STIPs, who are referred to as non-assenting STIPs policyholders.

An independent valuation of the traditional portfolios of Clico and BAT has been completed and received. The international firm of Oliver Wyman advised on the sale of the traditional business portfolios of both companies and the sales process for Clico and BAT has commenced. Streamlining of human resources at Clico and BAT is also completed.

Also in progress is an independent valuation of Home Construction Ltd. The report also updated the status of settlements for STIP holders. See box.

CB’s ‘15 annual report laid in Parliament

Challenges in 2016 will affect the Government’s revenues as well as the balance of payments and this requires a co-ordinated, focused effort on the part of fiscal and monetary authorities to address these challenges, says Central Bank governor Dr Alvin Hilaire.

Hilaire gave the projection in Central Bank’s 2015 annual report laid in Parliament last week. He said 2016 was expected to be challenging as the energy sector continues to grapple with natural gas shortfalls and low energy prices.

Hilaire said the banking sector remained resilient in 2015 despite the challenges to the domestic economy.

“Banks remained well capitalised and well positioned to respond to market shocks. The Central Bank continued to work with the banking and insurance sectors to strengthen their supervisory and regulatory frameworks,”

Describing the global economy status as “fragile,” Hilaire detailed how T&T’s energy-producing economy reacted to such vagaries, particularly in the energy sector. He said although the unemployment rate fell in the second quarter of 2015, the number of persons with jobs declined from a year earlier. As a result of the situation, he noted moderate foreign currency inflows to the domestic foreign exchange market

“As a result, the Central Bank increased its foreign exchange sales to the market, resulting in some decline in international reserves which nonetheless remained at comfortable levels.”

Settlements

• Those with principal balances of less than $75,999 over the period March 2011 to March 2016, some $335.6 million was paid to 11,126 of the 12,020 eligible holders. Some 7.4 per cent of STIP holders have not applied for the offer.

• Those with balances over $75,000—some 15,042 holders accounting for $11.3 billion—applied for the offer up to November 2014. This represents 94.6 per cent of the total STIP holders (in this category).

• On Clico resolution plan (Phase One)—over May 1, 2015 to February 29, 2016, approximately $693.1 million was paid to 501 STIP holders;

• Regarding BAT, Government advanced funds to BAT in July 2015 to meet traditional insurance policyholder liabilities in the statutory Fund, the principal balance only (without interest ) of non-assenting STIP holders and other key operational expenditure;

• Processing of applications for BAT STIP holders for the first partial distribution under the Resolution Plan began last October. To date, 22 of the 82 policy holders have been paid under the first partial distribution.

• Between April and November 2011, some 637 applicants who demonstrated a critical need for immediate cash up to $250,000 were paid $128.4m.

• At March 2015, some $732.4m was paid to credit and trade unions representing 93.9 per cent of the total applicants.

• Arrangements for STIP holders to covert bonds (one to 10 years and 11 to 20 years) to cash.

 

Source:
Gail Alexander
Trinidad Guardian
Tuesday June 28, 2016

http://www.guardian.co.tt/business/2016-06-28/central-bank-receives-angostura-valuation