Home' Trinidad and Tobago Guardian : June 27th 2013 Contents BG4 | COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2013 • WEEK FOUR
Concerned by the continuing decline in shareholder
value at TCL, some of T&T s largest institutional
investors and high net worth individuals proposed
five new nominees to serve on the board of the
financially-troubled monopoly cement producer.
The move by the group, which would result in TCL shareholders
voting to accept or reject the five at next month s annual general
meeting of the company, is being resisted by the board of TCL
in a development that could result in legal action to stop the
The battle erupted on June 14 when the group of TCL share-
holders submitted a proposal for the inclusion of five men as
nominees for directorship on the management proxy circular sent
to shareholders before the company s annual general meeting
scheduled for July 12.
The five nominees are PowerGen CEO Garth Chatoor, contractor
Emile Elias, retired Republic Bank director, Gregory Thomson,
CEO of Ramco Industries, Imtiaz Rahaman and management
consultant Kelvin Mootoo.
The TCL board at this time comprises nine directors and five
of them are retiring by rotation and have offered themselves for
re-election: TCL group chief executive Rollin Bertrand, Bevon
Francis, Carlos Hee Houng, Brian Young and Jean-Michel Allard,
according to the company s 2012 annual report.
Allard, a senior advisor to the IFC, was one of two foreign
directors appointed to the TCL board in March 2012 in accordance
with the Intercreditor agreement that the company signed with
its creditors in May 2012 in order to restructure its debt. The other
director, George Thomas resigned on March 31, 2013. Under the
Intercreditor Agreement, the lenders are obliged to nominate a
suitable candidate to replace Thomas.
TCL s bylaws allow a maximum of 12 directors on the board.
The TCL shareholders nominating the directors include the
hardware store owner, Helen Bhagwansingh, Alescon Readymix
director Kamal Ali, businessman Wilfred Espinet, hotelier Issa
Nicholas, Barbadian businessman, Allan Kinch and Tatil Life, a
member of the ANSA McAL Group.
The TCL shareholders argue that "it is the prerogative of share-
holders to decide and vote on the composition of the board of
directors, it is not for the directors to decide the composition of
The shareholders argue that the Companies Act at section 116,
117 and 118 provides a mechanism for shareholders to propose
the election of directors provided that the proposal is signed by
more than five per cent of the voting class of shareholders.
Among them, the TCL shareholders own 5.68 per cent of the
shareholding of the cement company.
In a 14-page letter to the minority shareholders on June 24,
the TCL board stated it had decided to omit the proposal to
include the five nominees in the management proxy letter.
TCL is arguing that the omission is based on a determination
by the company s directors, in the exercise of their best judgment,
that to include the nominees would be "inimical to the commercial
interest of the company" within the meaning of Section 119 (f)
of the Companies Act.
The shareholders in a June 20 letter to the TCL board had sig-
nalled that should the company s board refuse to accommodate
the nomination of the five, "we will seek legal redress including,
but not limited to, an application to the High Court to restrain
the holding of the AGM."
Section 122 of the Companies Act allows shareholders who are
aggrieved by a company s refusal to include a proposal in a man-
agement proxy circular to apply to the High Court which "may
restrain the holding of the meeting to which the proposal is sought
to be presented and make any further order it thinks fit."
90% decline in share price
On the issue of actions "inimical to the commercial interest
of the company," on Tuesday a representative of one of the TCL
shareholders seeking to nominate new directors, said that allowing
the status quo to continue at the cement producer would be
"inimical to the commercial interest of the company," given the
decimation of shareholder value at the monopoly cement producer
in the last five years.
Long-suffering TCL shareholders, who have not received a
dividend since 2007, have seen the cement producer s share price
decline by more than 90 per cent in the last five years. TCL traded
at $10.25 a share in the fourth week of June 2008, but the share
price has plunged to $0.95 a share this week.
The company s share price collapse means that the value of
an investment of $100,000 in TCL shares five years ago would
have plunged to below $9,175 today.
The 90 per cent fall in the value of TCL s share price in five
years is the steepest decline of any public company on the local
TCL s share price has collapsed as the company s fortunes have
declined. An after-tax profit of $137.4 million in 2008 plunged
to a loss of $383.7 million in 2012, which followed losses of $375
million in 2011 and $48.5 million in 2010.
Three years of audited losses have resulted in TCL racking up
$2.05 billion in outstanding debt obligations as at December 31,
2012, according to auditors Ernst & Young in an Emphasis of
Matter note in the 2012 accounts.
TCL concluded negotiations with its lenders to restructure its
billion-dollar debt in May 2012 after more than two years of nego-
TCL: interest rate on debt burdensome
Although the company says it is in full compliance with the
terms of the debt restructuring agreement, Bertrand in his CEO s
report in the 2012 accounts, said the board and management of
the company have continued to express concern to the lenders
about several aspects of the debt restructuring that will be bur-
densome to the group going forward.
"These mainly concern the extent of interest costs, excessive
legal fees, ongoing costs of financial and technical monitoring,
costly overseas directors and the requirement for an additional
expensive foreign executive," according to Bertrand.
And while the TCL board feels that the debt restructuring,
which it agreed to following extensive advice and deliberation,
has imposed burdens on the company, the steering committee
of lenders has stated in writing that "it is dissatisfied with the
management of the company and the direction in which the com-
pany is heading," according to TCL s June 24 letter to the share-
The steering committee of lenders comprises: state-owned
First Citizens, Citibank, ANSA Merchant Bank, RBC Royal Bank,
the International Finance Corporation and Republic Bank Ltd.
Some of TCL s large investors have responded to the company s
dismal recent financial performance by selling down their invest-
ments in the company, which has the effect of cutting their loss-
es.UTC, which originally held a ten per cent stake in TCL (about
TCL shareholders want
five new directors
Rollin Bertrand, TCL group chief executive
Garth Chatoor, PowerGen CEO
Emile Elias, contractor
Continued on page 5
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