Home' Trinidad and Tobago Guardian : February 5th 2015 Contents BG4| COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt FEBRUARY 2015 • WEEK ONE
Trinidad Cement Ltd (TCL) chairman Wilfred
Espinet says the company s proposal to remove
the 20 per cent cap on the ownership of shares
in the regional cement-producing group opens
the door for anyone to take control of the com-
Speaking in an interview on Tuesday night at the Hyatt
Regency hotel in downtown Port-of-Spain, Espinet was
responding to criticisms that the proposal---which is due to
be voted on by the company s shareholders at a special meeting
of TCL on Monday---will open the door to the Mexican cement
giant Cemex acquiring majority control of TCL.
The relationship between the vote to remove the 20 per
cent cap and the possibility that it could open the door to the
acquisition of TCL by Cemex was first raised in a news report
in the Guardian on December 30 but was repeated in a statement
by the Oilfields Workers Trade Union (OWTU) on Monday.
Asked if the removal of the 20 per cent cap opened the
door to Cemex taking control of TCL, Espinet said: "The
question is one that has been raised to a pitch now and I am
viewing it that we are almost getting to hysterical levels of
the Cemex bogey.
"Let me say this much: the directors are very clear in their
minds that there are sensitivities in T&T and perhaps the
entire Caribbean about the ownership of the cement company
and more specifically about Cemex s involvement.
"I don t share that but I understand it.
"What the directors are seeking to do is inject capital into
the company, which will ensure that Cemex will not be able,
even if it cornered the entire amount, to raise capital that will
take them into control of TCL."
When it was pointed out to Espinet that he was responding
to a question on the impact of the proposed rights issue and
not the removal of the 20 per cent cap, Espinet said: "To
answer your question very clearly, it opens the door for anybody
to take control of the company. If you don t have a restriction
then anybody can do that."
The Business Guardian asked Espinet to clarify his statement
that the removal of the 20 per cent cap opened the door to
anyone taking control of TCL, in the context of Cemex, which
owns a 20 per cent stake in TCL, having the greatest interest
in and capacity to take control of TCL.
He said: "This is just my opinion, because I have no right
to be making a determination about what Cemex s objectives
are, but I would say that Cemex is a worldwide manufacturer
of cement. If I were a manufacturer of anything and I had an
opportunity to expand my operations into a new market, I
would certainly look at it with an intention of using that
"My opinion is that it is unlikely that they are here to put
money in the stock exchange and go.
"More so, we have invited them to bring into this company
management inputs in technology and marketing that we feel
are critical to the restructuring."
According to TCL s articles of association, the removal of
the 20 per cent cap on share ownership requires the vote of
75 per cent of shareholders at a special meeting.
Back in 2002, a similar attempt to remove the 20 per cent
cap was voted down by TCL shareholders as it was felt 12
years ago that the approval of such a vote would have been
the prelude to a takeover of the company by Cemex.
Cemex is TCL s largest single shareholder with a 20 per
cent stake in the company. TCL s other major shareholders
are Republic Bank Bank with 11.06 per cent, the National
Insurance Board with 10.16 per cent and a company named
Baleno Holdings, of which very little is known, with 8.21 per
Espinet said TCL is the only company on the local stock
exchange that has a restriction on its share ownership. Such
restrictions are frowned upon, the TCL chairman said, because
of problems that result in raising capital.
He said it was his understanding that the reason TCL s
lenders made the removal of the 20 per cent cap a condition
of the restructuring of the company s US$300 million ($1.92
billion) debt was because "they saw it as a restriction to the
company s accumulation of capital. The cap is a hindrance to
the company getting capital freely into the system."
TCL proposes to raise about $320 million (US$50 million)
in capital as a result of a proposed rights issue.
Espinet said: "If this company could not put in the capital,
we would be back to where we started. That would be a disaster
that nobody would want. I have seen people writing com-
mentaries about voting against lifting the 20 per cent cap. I
hope that they will want to write that they put TCL into bank-
ruptcy because they felt that was the right thing to do."
He said the company s previous CEO, Rollin Bertrand, had
written a dissertation on the benefits of the 20 per cent cap
"but none of his arguments concerned the preservation of
Espinet noted that individuals and institutions invest money
in companies based on an assumption that they will get a
return on their investment and that the operations of the
company will add value to their investment.
"If you want to sell me on social conscience and a number
of other things, then you need to address another forum.
Perhaps you need to get into politics," said the TCL chairman,
adding that a pragmatic investment outlook would dictate a
concentration on the performance of the company.
TCL has not paid a dividend to its shareholders since 2007.
Those shareholders saw the value of their shares decline to
as low as $0.95 under Bertrand s stewardship.
Espinet also noted that TCL under Bertrand was unable to
pay monies owed to its lenders and the backpay decision of
the Industrial Court at the same time.
Bertrand was terminated as the group CEO of TCL and its
subsidiaries by letter dated September 22, 2014, following a
review of his performance by the board headed by Espinet.
Espinet was elected as chairman of TCL at a board meeting
immediately following a special (compulsory) meeting of share-
holders of the company on August 19, 2014.
Just prior to the special (compulsory) meeting, Bertrand,
Andy Bhajan, Brian Young, Leonard Nurse, Carlos Hee Houng
and Bevon Francis submitted their resignations as directors
of the company.
That meeting elected Espinet, Alison Lewis, Chris Dehring,
Michael Hamel-Smith, Francisco Aguillera, Carlos Palero and
Nigel Edwards. Those directors joined Alejandro Ramirez, Jean
Michel Allard and Wayne Yip Choy on the board.
Explaining TCL s previous reluctance to engage some of the
criticisms of the company s plan, Espinet said TCL has been
very cautious about the information it puts out "because many
of the sensitive discussions that are taking place cannot be
made known as they will all have a substantial impact on the
company and therefore there is a requirement for proper dis-
The company s reluctance to speak during these sensitive
negotiations---mostly with its lenders at this time---"has left
a void and that void is being filled by several people who may
have their own agendas to fill."
Espinet sees the initial restructuring of TCL as being a
"complex undertaking" that is "breaking ground" with many
dimensions for which there is not much precedent in T&T.
He has previously said that for TCL to survive, all of its
major stakeholders will be required to give up something for
the long-term benefit of the company.
The all-encompassing restructuring, he said, has three main
pillars, affecting the employees, the lenders and the share-
An agreement, signed in December, with the
company s unionised employees, through their representative
union, the Oilfields Workers Trade Union, which involved a
$150 million settlement of wage increases and backpay from
2009 to the end of 2014. Some $68 million of the settlement
was paid three days before last Christmas. Workers will receive
shares in the company in lieu of another portion of settlement
and some of it has been deferred.
---An agreement with the TCL s lenders that Espinet
expects would lead to a debt-repayment schedule that is more
favourable to the company, which he said would result in a
more favourable average cost of borrowing. Having restructured
the company s balance sheet, TCL plans to seek new financing
that would allow the company "to retire our existing debt by
replacing it with debt that is cheaper."
He said the strengthening of the company s balance sheet
to allow it to retire its existing high-cost debt "is not a pie-
in-the-sky thing like what was done in the past." According
to Espinet, what happened in the past was that "people just
ran out and did that but nobody had confidence in the whole
The TCL chairman was referring to the expensive and ulti-
mately unsuccessful roadshow of six North American cities
in May last year in which TCL s former CEO, Rollin Bertrand,
attempted to tap the international junk bond market for funding
to refinance the group s US$300 million debt.
---TCL s shareholders will get details of their
contribution to the restructuring of the company at the special
meeting of the company on Monday at 5 pm at the Hilton
Cemex bogey close to
Fired TCL CEO, Rollin Bertrand
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