Apr 2019 Financial News

Arthur Lok Jack Statement on the NCB purchase of GHL shares

Apr 08, 2019

The Foreign Investment Act has two (2) requirements which must be met by NCBJ.

1. Payment in an internationally traded currency and
2. Through an authorized dealer such as a bank

In order to assist NCBJ in funding the all-cash transaction at the new increased price, the Key Shareholders (KS) offered to loan NCBJ the sum of US$45M

There are different opinions as to how the loan could be transacted. The simplest way would be a set-off i.e. NCBJ pays the KS US$45M less for their residual shareholding and issue a debt instrument to the KS. This is not dissimilar to a person selling a property and giving a mortgage to the buyer. The set off avoids the KS having to receive the US$42M in cash and then lend it back to NCBJ on the same day, which is in effect, an exchange of cheques. This is a cost (Bank Fee etc.) that could be saved by NCBJ.

The KS have been advised that the set off complies with the FIA. However it is apparent that the Ministry’s preference is a narrow interpretation of the FIA and as such is requiring NCBJ to pay the KS in the same manner as all other shareholders, namely, in cash at closing.

NCBJ and the KS have agreed to adhere to this requirement.
 

Source:
The Trinidad and Tobago Express Newspaper
Monday 08 April, 2019