Home' Trinidad and Tobago Guardian : November 9th 2014 Contents NOVEMBER 9 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
FINANCE | SBG5
The above diagram shows the workings of an SME fund. Below shows the potential returns on sale of an SME.
to pay back the fund, the monies
that were forwarded or lent to them.
They are not going to sell to a third
party or list it on the exchange. If
that is the case, what happens to
the fund is it tags along with the
entrepreneur and should the com-
pany be sold for ten times its book
value, the fund will also benefit like-
wise. If you put $100,000 into the
company and if they were listed on
the exchange ten times its book
value, you would get a million dol-
The government will also build a
business assistance facility which
will provide training, consultancies
and other support services to SMEs.
Maharaj said the new model rep-
resented a win-win situation for
all of the stakeholders. The gov-
ernment, he said, would have the
opportunity to bring much needed
diversification to the economy, as
well as benefit on the interest from
He also said it eliminated the
problem of private investors not
gaining sufficient returns on their
investment with an added benefit
of reduced liquidity in the banking
sector, as private sector credit
increases to facilitate investing. SMEs
meanwhile will have access to afford-
able financing, not tied to their ability
to provide collateral. The fund man-
ager will get a fund management fee
and an annual bonus and "carried
"This is a term used in fund man-
agement. It encourages the fund
manager to focus on the liquidation
of the portfolio, the full payment on
the principal and the interest of the
government loan and the return of
capital and profits to the investors."
Moreover, the new system fosters
greater co-operation between the
fund manager and the entrepreneur
as they work together to achieve the
success of the business, Maharaj
The IFC head said the plans for
the programme have been sent to
Cabinet and the IFC is still waiting
on its response.
He said it was likely, however, that
once approval was granted for the
project, it would be managed by the
IFC, who would more than likely be
responsible for finding staff to
administer the programme as well
as tendering the RFPs for fund man-
agers. This, he expects, would take
between eight and 15 months, after
which the fund will be turned over
to the managers.
From Page 4
Entrepreneur, manager working together
Continued from Page 3
an application to submit a recommendation to the minister.
The minister (which in this case means Cabinet) then has 60 days to
indicate his approval, modification or rejection of the recommendation.
Subsection 9 of clause 21 states that if the minister has not indicated
to the authority in writing within 60 days whether he is approving, modifying
or rejecting the recommendation "it shall be deemed to have been approved."
Questioned on the fact that the minister has had TATT s recommendation
since "early September" which would make it close to 60 days, the authority s
CEO Cris Seecharan, said Cabinet had sought some clarifications on the
recommendations made by TATT and therefore the clock has had to be
He said he did not have the information on when the clarifications were
provided and he would need to check his corporate secretary.
He also drew a distinction between a competitive bid process and an
application made by a potential operator, suggesting that the 60 day limit
for Cabinet approval may not apply to competitive processes, such as the
700 MHz process.
...Where does all of this leave TSTT?
Digicel has already indicated that it is likely to challenge the acquisition
of Flow by CWC, if the latter retains its 49 per cent stake in TSTT.
The CEO of TATT, Cris Seecharan, also decribed the situation of cross-
ownership by CWC of 49 per cent in TSTT and 100 per cent of Columbus
as potentially anti-competitive.
TATT is almost certain to block the acquisition of Columbus by CWC
if the London-based company does not sell its stake in TSTT.
And CWC s 59-page announcement of the transaction on Thursday
makes it clear that the regulators in T&T, Jamaica and Barbados MUST all
approve the acquisition for the transaction to be completed.
So, CWC will attempt to hold talks with Finance Minister Larry Howai
within the next ten days and it is expected to make a firm offer to sell the
49 per cent stake in TSTT.
Should the Cabinet not approve or delays approval unduly, the purchase
of CWC s 49 per cent stake by National Enterprises Ltd (the investment
holding company that owns the State s 51 per cent stake), the deal would
But that would leave a half-baked TSTT facing the prospect of previously
unseen competition in the 700 MHz (LTE) space, which is the future of
Alternatively, if TSTT and CWC are not enemies, the majority state-
owned company can facilitate the rollout of the LTE spectrum by CWC/Flow
by making its cell towers and other infrastructure available to the enlarged
Clearly, Cabinet has some leverage if not a whole lot of time.
Cabinet can use its power to approve the purchase of the 49 per cent
stake---as well as its power to approve the two new 700 MHz licences---
as leverage in its negotiations with CWC over the future shape of mobile
telephony in T&T.
Digicel, no doubt, would like a seat at that particular table.
Will they get it?
Ratings could be raised
Two international rating agencies on Thursday night signalled their
approval of the proposed acquisition of Columbus International (which
trades as Flow in Trinidad) by CWC, which owns 49 per cent of TSTT.
S&P placed Columbus on CreditWatch for potential upgrade as it assessed
the impact of the cable company s senior unsecured notes for US$1.25
billion, which CWC will assume.
Moody s also placed Columbus ratings on review for upgrade.
"The review was triggered by CWC s plans to acquire Columbus,
and our view that it would lead to an enhancement of Columbus credit
profile, given CWC s larger scale and leading market positions throughout
the Caribbean and Panama, as well as its stronger balance sheet and
The review will mainly but not exclusively focus on the "timely and
successful execution of the acquisition," Moody s said.
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