Jan 2017 Financial News

New Cemex offer still not good enough - TCL board

Jan 23, 2017

Along with the disclosure that some of the company’s directors and officers have decided to accept the upgraded offer per share for units in Trinidad Cement Ltd (TCL), the board of TCL has issued a new circular advising shareholders to reject the latest offer from Cemex S A’s subsidiary Sierra Trading, which they say remains below valuation.

Cemex, a global materials trader based in Mexico, announced its intention in early December to acquire up to 132,616,942 ordinary shares in TCL at TT$4.50 each, an offer subsequently raised to TT$5.07 after company directors on December 23 recommended a rejection of the offer as unfair.

TCL’s main operations are in Trinidad and Tobago, Jamaica and Barbados. It is the majority shareholder of Caribbean Cement Company Ltd (CCCL), a cement producer in Jamaica.

Together with Sierra’s existing share ownership in TCL of approximately 39.5 per cent in the Trinidadian company, the acquisition — if successful — would result in the company holding up to 74.9 per cent of the equity share capital in TCL.

On January 11, Cemex upped its price by TT 57 cents per share, also offering to pay shareholders who accept their offer — except for those in Barbados — the option of receiving payment in US dollars. Sierra would now pay approximately TT$672 million (US$101 million), based on the revised price. The acceptance date of January 24 remained.

But, on January 19, by way of a supplemental directors’ circular, the TCL board again said the offer fell below the Ernst and Young valuation in the range of TT$5.60 to TT$6.18 — a value submitted as part of a fairness opinion solicited by the board.

In Thursday’s circular, the board said, “Notwithstanding the final offer of TT$5.07 per share made by Sierra, the Board of Directors of TCL recommends that the bid, as amended and varied, be also rejected.”

The principal reasons they said included the fact that the offer is below the range of values recommended.

The board said it “has concluded that it would not be in the interest of shareholders to accept the Amended Offer of TT$5.07 per share”.

Directors further said, “The board is aware that shareholders in Jamaica and in Trinidad and Tobago have the option to receive their compensation in the amount of US$0.76 per share and advises shareholders to consider whether simply that fact would have an impact on their decision making.”

The circular disclosed that three directors had so far decided to accept the offer. It urged shareholders to read all information made available, including the Availability of Funds letter from Cemex.

Ernst and Young noted in their valuation report, which was attached to the latest circular, that the fair market value of 100 per cent of TCL’s issued and outstanding ordinary shares, as at 31 December 2016, is in the range of approximately TT$2.09 billion to TT$2.32 billion, or TT$5.60 to TT$6.18 per ordinary share, or a mid-point of TT$5.89 per ordinary share.

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter 
Jamaica Observer
Sunday January 22, 2017    

http://www.jamaicaobserver.com/business/New-Cemex-offer-still-not-good-enough---TCL-board-_87200