Home' Trinidad and Tobago Guardian : February 12th 2015 Contents BG6 NEWS
BUSINESS GUARDIAN www.guardian.co.tt FEBRUARY 2015 • WEEK TWO
There is no move to takeover
Trinidad Cement Ltd (TCL)
by Mexican cement giant,
Cemex, says Wilfred
Espinet, chairman of TCL
who spoke to Business
Guardian about the com-
pany's future on Tuesday after shareholders
met at the Hilton Trinidad and Conference
hotel on Monday night to vote on removing
the 20 per cent cap.
Shareholders representing some 91.4 per
cent of TCL's shares voted for the removal of
the 20 per cent restriction, clearing the way
for financial restructuring to take place of the
company's $1.9 billion debt.
Cemex is the world's largest building mate-
rials suppliers and cement producers. It oper-
ates on four continents, with 66 cement plants,
2,000 ready-mix-concrete facilities, 400 quar-
ries, 260 distribution centres and 80 marine
Espinet said: "To say whether or not Cemex
takes over, I am not in any way aware of any
attempt on Cemex's side to do it. In fact,
Cemex's position today as it stands, is that
they were adamant they were not going to
make an attempt to take over the cement com-
pany in T&T---TCL."
The TCL board on Friday passed a resolution
to raise capital through a rights issue of
124,882,568 new shares at a price of $2.90
per share with existing shareholders being
given the right to purchase one new share for
every two shares held.
At Monday's meeting it was disclosed that
in order to ensure a successful rights issue,
the TCL board agreed it would be beneficial
to have a "backstop shareholder" and had
chosen a Cemex subsidiary, Sierra Trading,
to fulfill that role.
As the backstop shareholder, Cemex agreed
to participate in the rights issue to the fullest
extent permitted by its 20 per cent share-
holding. But the Mexican cement giant went
further and agreed to commit additional cap-
ital up to a maximum total participation of
US$45 million in order to ensure that TCL
meets a capitalisation target amount of at
least US$50 million.
In consideration of the backstop position,
the board has agreed to grant an exclusive
right to Sierra Trading to subscribe and pur-
chase any shares in the rights issue which
are not taken up by shareholders, up to an
amount that will not exceed 40 per cent of
TCL's outstanding shares.
The board also agreed that if Sierra Trading
has not achieved a shareholding in TCL of
at least 35 per cent in the rights issue, then
subject to receiving all required approvals---
including shareholder approval---to issue a
private placement of TCL shares in favour
of Sierra Trading in an amount that will per-
mit them to achieve a shareholding of 35 per
cent of TCL's outstanding shares.
Espinet added that if any individual or
company wanted to take over TCL, there is
a process in place.
"The shareholders said it was not in the
interest of the company or the shareholders
to maintain and retain that cap. Given the
fact that they removed the cap after all the
administrative processes have been achieved,
it means if Cemex or anyone, for example,
if ANSA McAL wanted to take over TCL you
can do so."
Asked whether the increased volume of
TCL shares trading on the TTSE would
attract the capital which TCL required,
Espinet said: "The restructuring exercise
took a number of things to be considered
and reconsidered. For example, it involves a
restructuring of the employees' relationship,
it involves a restructuring of the debt and
it involves a restructuring of the balance
"One of the things that is necessary to
restructure the balance sheet would be to
inject new capital, which this attempts to
do is, it attempts to raise capital. It can satisfy
the restructuring demands that have been
made by our lenders."
Commenting on Monday night's vote by
the shareholders, Espinet said the removal
of the 20 per cent cap is being seen as a
positive move both by the shareholders and
the board. Substantiating his point, Espinet
said the close of trading on Tuesday, the
share price moved up by $0.21 and this is
a clear indication of the shareholder's
approval of the 20 per cent removal.
Asked whether members of the construc-
tion sector needed to be concerned by an
increase in price, Espinet said he expected
them to welcome the move to have more
shares traded on the TTSE.
"They could feel more comfortable that
cement they will now be getting is going to
be more reliable from a quality point of view.
We have people from a worldwide operator
of cement now putting its name in such a
way they will have to be ensuring the brand
stands up to their standards. They will not
be tainted by any bad branding," he said.
Espinet added that stakeholders have an
issue with inefficiencies in the operations of
"They don't have a quarrel with pricing
because prices rise on everything everyday.
What we really have a quarrel with is when
you put some kind of a protective arrange-
ment in place and create inefficiencies for
it."Expanding on the operational efficiencies,
he tells shareholders: "One expects greater
efficiency in the operation and move to a
more world competitive standard."
Looking to the future he said now that
one more hurdle has been achieved, it's time
to move forward to the second hurdle.
"The exercise of the rights issue so we can
get the funding in and then get on to re-
financing the debt of the company."
Asked how long the entire exercise to be
completed, Espinet said by June.
The vision has been clearly laid out. The board has found what we consider to be the
person to partner as a major stakeholder, the Cemex company. The company is going to be
bringing to TCL a lot of its expertise in cement making, its market knowledge meaning, for
export markets especially. It will be for TCL an opportunity to get Cemex's help in raising
finance because raising finance is a very critical part of us restructuring the company.
chairman, Trinidad Cement Ltd
Firm was close to
insolvency in Dec
In a presentation at Monday's special
meeting, managing director of Advi-
sory Services at PwC, Brian Hackett,
concluded that in the "absence of
materially increased lines of credit/funding,
a condition of Insolvency would have likely
emerged by December 2014."
PwC was hired as TCL's financial con-
sultants shortly after the new board was
elected by the shareholders at a special (com-
pulsory) meeting last August,
He based this on the fact that TCL had
$171.2 million in available cash as at Sep-
tember 30, 2014 and would have generated
an estimated $66.8 million in net cash from
its operations between October and Decem-
ber. This would have left the company with
$238 million to meet its commitments.
TCL would have faced debt and debt-like
obligations of $472 million, comprising debt
service, liabilities to employees and other
current debt-like commitment.
This would have left the company with
a funding gap of between $234 million and
$266.4 million, leading the PwC expert to
conclude: "In our view the group could not
meet its debt, and other material commit-
ments as they were scheduled or likely to
Hackett's presentation also noted that the
TCL group, as at September 2014, had
achieved 72 per cent of its revenue target,
60 per cent of budgeted EBITDA, but only
35 per cent of full-year budgeted net prof-
chairman of TCL
TCL directors at Monday's
special meeting of the
called to vote on the
removal of the
20 per cent cap.
Sitting in the front row are:
Alejandro Ramirez, left,
CEO of TCL;
Alison Lewis, Francisco
Aguilera and Jean Michel
Allard. In the back row:
Wayne Yip Choy, left.
PwC's Brian Hackett
sits at far right.
PHOTOS: JEFF MAYERS
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