Home' Trinidad and Tobago Guardian : July 11th 2013 Contents BG6 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt JULY 2013 • WEEK TWO
After three years of audited losses
and five years during which the
value of the company has
declined by over 90 per cent,
TCL chief executive Rollin
Bertrand on Tuesday expressed confidence that
the financially troubled cement producer, which
is based in Claxton Bay, has finally turned
around its fortunes.
Speaking in an exclusive interview with the
Business Guardian on Tuesday in the Hyatt
hotel lobby, Bertrand based his assessment of
TCL s future prospects on the company s dec-
laration of $14.1 million in unaudited after-tax
profits for the first quarter of 2013 compared
with a loss of $74.8 million for the same January
to March period last year.
He also based his turnaround assessment
on his insider s knowledge of sales and profits
at the company, which has not paid its share-
holders a dividend since 2007.
Asked what he would say to the TCL share-
holders, who have suffered a decimation in the
value of their shares in the last five years,
Bertrand said: "I would say to the TCL share-
holders what the Cemex and Citibank boards
told their shareholders: We are on the rebound.
We got hit by a global economic crisis, but we
managed it and managed our way through it
and we are now on the rebound.
"So, hold on to your shares because the value
is going up."
Accounting for the losses totaling nearly
$700 million that the company experienced
in 2010, 2011 and 2012 and the fact that it was
insolvent in 2011, Bertrand said TCL, like many
other cement companies, was subjected to the
global and regional crises that began in 2008,
which were most strongly felt in the construc-
In the Caribbean, governments are the main
drivers of infrastructure spending that uses
the cement and concrete produced by TCL,
he said, and most regional governments are
Bertrand argued that many of the cement
producers in the world, such as Cemex, La
Farge and Holcim were even more harshly
impacted by the reduction in infrastructural
spending that resulted from the 2008 "financial
tsunami" than TCL.
Bertrand said TCL s financial position today
is mainly due to the global and regional issues,
and not any big-picture mistakes that the
"Strategically, we have not made any mis-
takes. If in 2005 when we were expanding
Carib Cement (TCL s Jamaican sunsidiary),
we knew that a global economic crisis was
coming and we still went ahead, then one
could argue that we made a strategic error.
"From where I sit, we were encouraged by
our lenders, our shareholders, by all of our
stakeholders to expand and modernise our
"We invested in our core business. We did
not squander any money. We went in to larger
markets in order to improve shareholder value.
"So from a strategic perspective, I believe
we have done the right thing," Bertrand said.
He said the fact that the expansion in
Jamaica blew past its US$135 million budget
by 50 per cent and missed its targeted com-
pletion date was not as a result of management
He said it was "very common" for projects
in that period to be over their budgets, as the
company was told by the International Finance
Corporation, the member of the World Bank
Group and a co-financier of the expansion
"The feedback from the IFC was that all
projects during that time period were over
budget as a consequence of the rising prices
of steel, copper and other commodities just
before the crash," said Bertrand, adding that
the problems the company faced with the
expansion project were "external impacts"
and not of TCL s creation.
Bertrand said: "I want to make the point
that our lenders did not raise any red flags
and they did a full audit of the expansion. Our
external auditors did a full review of the expan-
sion and raised no flags. There was no cor-
ruption, mismanagement or slackness. It was
simply a rise in commodity prices."
The cost overrun was financed by internally
generated funds and by overdraft, Bertrand
explained, as the lenders "did not take us par-
ticularly seriously," when approached about
additional funding. "I think that was an over-
sight on their part."
He said TCL s decision to complete the proj-
ect was most important as the worst thing
that could have happened to the company
would have been not to finish the expansion
Bertrand said that if markets contract for
the goods produced by a capital intensive, low
variable cost, high break even industries---as
the cement industry is---the only thing that
a company can do is find new markets.
TCL has been pursuing four new markets
over the last three years: Haiti, the French
West Indies, Brazil and Venezuela, in an
arrangement that involves cement from Jamaica
for that country s debt under the Petrocaribe
TCL has already entered the Haitian and
Brazilian markets, is about to start supplying
to Martinique and Guadeloupe and is looking
to finalise arrangements to supply Venezuela.
The TCL chief executive is not willing to
concede that the 92-day strike carried out by
the Oildfields Workers Trade Union (OWTU)
from February 2009 was a management mis-
"I don t see that as a mistake either because
you can t tell me that I must cut costs and
manage costs---labour being a major cost---
and yet when I take a stand to manage costs,
you tell me it was a mistake," he said.
Bertrand said TCL explained the dire finan-
cial circumstances that the company was in
to the OWTU "on numerous occasions."
He said the trade union was "unreasonable"
to strike "as it did not have to put the company
and its members through 92 days of suffering
for an outcome that is happening now, which
is the matter is before the Industrial Court."
During the first half of 2012, the TCL board
and executive had to manage both the strike
and the completion of the $2 billion debt
In his 2012 CEOs statement in the TCL annual
report, Bertrand described the debt restructuring
agreements as containing onerous condition-
Bertrand said he did not agree that the board s
signing off on debt restructuring agreements
that contained onerous conditionalities was a
"At the end of the day, you have to balance
many issues when you are in senior manage-
ment," he said. "We could not have allowed
the company to continue in that state of limbo."
He cited the drying up of TCL s working
capital as one example of the uncertainty caused
by the 18 months of negotiation for the debt
restructuring. TCL s lack of access to working
capital led to nervous customers and suppliers
and employees being in a state of uncertain-
ty.Bertrand said: "If you strip away the impair-
ment and one-off issues such as debt restruc-
turing, a major aspect of the poor performance
in 2011 and 2012 was the absence of working
capital. We were running the business on cash."
Given the lack of working capital, which
caused the shutdown of the plant in Jamaica
as it needed to sell cement to pay for inputs,
TCL had to close off the debt restructuring
negotiations at some point.
He said TCL pointed out the onerousness of
some of the restructuring conditions during
the negotiations and after the agreements were
Imposing two foreign directors on the TCL
board was "not reasonable," said Bertrand,
because of the cost involved in flying them
down. He also argued that the operational mon-
itoring imposed by the lenders makes recom-
mendations for plant improvements, but the
debt restructuring agreements cap capital expen-
diture at US$15 million.
"No restructuring is perfect, but I think there
are certain aspects of this restructuring the
lenders would need to reflect on and possibly
help the company and improve going forward,"
He said the ability of TCL to negotiate lenien-
cy from its lenders would be related to the per-
formance of the company, its ability to meet
its financial targets and its convenants.
As a result of the "onerous" conditions
imposed by the lenders, TCL is looking to nego-
tiate a new US$300 million debt restructuring
next year and is already talking with lenders,
including some foreign financial institutions.
This would result in lower interest rates on
the company s debt.
In the run-up to tomorrow s annual general
meeting, the TCL board turned down a proposal
by some minority shareholders, representing
5.68 per cent of the company, to nominate five
new representatives to be voted on by the TCL
shareholders to join the board.
Bertrand said he believes Cemex, the Mexican
cement giant that owns 20 per cent of TCL,
will support the re-election of the five current
directors of the local company s board at tomor-
row s annual general meeting.
Five TCL directors retire by rotation and have
offered themselves for re-election: Bevon Francis,
Carlos Hee Houng, Brian Young, Jean Michel
Allard and Bertrand.
Asked why he believed Cemex would support
the current TCL board, Bertrand said: "Because
I believe that they do not have a difficulty with
the current board."
Cemex acquired its 20 per cent stake in TCL
in 1994 from the Government, which had com-
menced the privatisation of the Claxton Bay
company in 1990. Cemex now owns 49,953,027
shares in TCL. The value of its stake in TCL
has declined from $511 million at the end of
June 2008 to $49.9 million today.
The TCL chief executive said he also believes
that Cemex controls Baleno Holdings Inc, a
mysterious company that is not registered
locally, which owns 20,500,000 TCL shares or
8.21 per cent of the company.
Asked why he referred to Cemex as controlling
28 per cent of TCL if he did not have the evi-
dence, Bertrand said: "It s a perspective that
some people have. We tried to get evidence but
it was not forthcoming."
Asked again why he believed that Baleno was
Cemex, the TCL executive said: "When I asked
who are the beneficial owners of Baleno, I don t
get an answer. So, you know, on the balance
TCL's on the rebound---Bertrand
Rollin Bertrand, TCL chief executive
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