Home' Trinidad and Tobago Guardian : August 8th 2013 Contents BG12 FEEDBACK
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 2013 • WEEK TWO
Hats off to the Angostura Holdings Ltd (AHL) chairman,
Gerry Yetming and his management team for returning an
after tax profit of $196.7 million for the half-year ending June
30, 2013, an increase of more than 122 per cent over the cor-
responding period last year along with their decision to pay
an interim dividend of $0.08 per share.
This is indeed welcome news, given the many challenges
which the Group has faced in the post-2009 Clico-collapse
I am also pleased to note that the chairman s half-year
report discloses that AHL continues to benefit from reduced
interest cost resulting from its 2012 and 2013 debt reduction
efforts and that the Group has settled all Euro-denominated
debt; and in so doing has realised foreign exchange gains of
$17.7 million and a gain on financial liability of $44.4 million.
However, it has not escaped my attention that the report
is conspicuously "silent" on the issue of the $984.6 million
(TT$ denominated) receivable/debt that is still owed to AHL
by CL Financial (CLF).
But for the time being, I am prepared to treat this as an
oversight, in light of the chairman s previous statement at the
group s AGM held on April 29, where in response to a "tsunami"
of concerns unleashed by shareholders present (including yours
truly), he essentially assured the meeting that CLF had not
turned its back on this outstanding debt.
He indicated AHL was actively engaged in discussions with
its parent company (or as some shareholders insisted, the
majority shareholder) with a view to settling same.
He hastened to add, however, that he has decided to recuse
himself from these negotiations given the "apparent" conflict
of interest position which is likely to arise because of his chair-
manship of both CLF and AHL. He also declined to go into
any further detail, adding it would not be appropriate to discuss
CLF business at an AHL AGM.
As your avid readers would recall, this amount formed
part of the $1.28 billion loss declared by AHL in its 2008
audited financial statements published in late 2010---almost
a year-and-a-half after it was due and possibly the largest
loss incurred by a publicly-listed company in the history of
T&T Stock Exchange.
According to the chairman s report at the time, AHL s
financial statements were "materially impacted by post-year-
end events involving CL Financial" and the "precarious"
financial position of its parent "impaired the collectability
of circa $1.185 billion in receivables from the group." This
required certain accounting provisions to be made that resulted
in a net loss of $1.28 billion.
It should be noted that the then auditors (PwC), who were
subsequently replaced by Ernst and Young, had complained
one of main reasons they were unable to complete the com-
pany s 2008 audit was because of "the significance of the
inter-company transactions between Angostura and its parent
company, CL Financial and other related matters."
In fact, they also opined that "of major concern is a receiv-
able from CLF in the amount of $633 million arising out of
previous sale and transfer of assets from Angostura to CLF,
for which payments have not yet been made."
The truth be told, I am somewhat disappointed that since
the chairman s remarks at the last AGM some three months
ago, to date, there has been no further official communication
from him or anyone in management as to the status of this
Certainly, this does not augur well for good shareholder
relations as quite a number of minority shareholders have
already started e-mailing me to complain that this matter
is taking much too long.
Fortunately, I have been able to refer them to the words
of Ministry of Finance, in an exclusive BG interview (published
last Thursday) on the proposed "CLF resolution" (that is
now before Cabinet), in which he states, "The $1.6 billion
in value (set aside for CLF and which includes 51 per cent
of AHL) is (to be determined) AFTER internal company (CLF)
debt has been taken into account."
I am, therefore, on behalf of the AHL minority shareholders,
calling on Yetming, in his capacity as chairman of AHL and
CLF, to kindly confirm the above by issuing an appropriate
statement as this would go a long way in allaying their anxiety
Minority shareholder rights advocate
chairman's report silent
on $1b debt owed by CLF
SAO PAULO - Last week s frosts in southern Brazil damaged
nearly a fifth of the unharvested cane crop in the principal
growing region, an event likely to cut sugar exports from the
world s largest producer, agriculture research company Datagro
said on July 31.
Severe early morning frosts on July 24 and 25 in three of
Brazil s top sugar-cane states devastated large areas, Datagro
president Plinio Nastari told Reuters. The cold blight comes
at the peak the crushing season when more than half of Brazil s
expected record 590-million-tonne crop remains unharvest-
ed.Although Nastari was unable to say how much mill-output
will drop or reduce a global sugar glut that has pushed prices
to three-year lows, he said 65 million metric tons, or 18 per
cent of the cane standing uncut in fields was damaged by the
Frost in tropical Brazil has long been a weather risk for
global coffee markets. This frost, though, is the first in recent
history that threatens to significantly cut sugar output and
it s impact will likely extend into the next harvest, too.
"We don t know how much of the affected ... cane has been
lost yet; we should know in about a week," Nastari said by
telephone. "In some cases, the ratoons (young shoots) were
hit and will need to be replanted, so the impact will carry over
into next year s crop."
New York ICE front month sugar futures recovered from
an early morning low of 16.68 cents/lb soon after Reuters
reported news of the potential frost damage. Prices later pierced
the 17-cent threshold for the first time in a month to settle
nearly flat with Tuesday at 16.92.
Alphaville, Brazil-based Nastari, one of Brazil s most respected
sugar experts, has a PhD in agricultural economics from Iowa
State University and hosts widely attended sugar and ethanol
conferences in Brazil and abroad.
Saving the crop will depend on speed, Nastari said, as some
fields, where frost has killed the core, or gem, of the cane
plants, will likely rot before they can be harvested.
"The most serious damage from the two days of frost
occurred over 70 to 80 percent of the cane still standing in
the states of Parana and Mato Grosso do Sul," Nastari said.
"A cane plant s gem is its center of growth. When the frost
kills the top gem of a cane plant, it stops growing and begins
He added that 15 million to 16 million metric tons in Brazil s
fourth-largest cane state Parana and 16 million to 18 million
metric tons in Mato Grosso do Sul, the fifth-largest cane pro-
ducer, were seriously affected.
Before the frost hit, the government s crop supply agency,
Conab, expected the two states to produce nearly 90 million
metric tons of cane this harvest. The centre-south cane crush,
which accounts for nearly 90 per cent of Brazil s sugar and
ethanol output, is roughly 40 per cent complete.
Nastari said an additional 30 million metric tons of cane
in the Paranapanema Valley in Sao Paulo, Brazil s top-producing
cane state, had been affected, but to a lesser degree. Only
lower slopes were hit by frost he said.
Revised market estimates
According to data published by Brazil s cane industry asso-
ciation Unica on July 24, the main centre-south cane region
in question has harvested 223 million metric tons of an expected
590 million metric ton crop. Market estimates for centre-
south output average about 585 million metric tons and are
being revised lower.
Nastari said that mills will be able to crush some of the
cane that frost killed, but the frost-damage was extensive in
Parana and Mato Grosso, and on some Paranapanema Valley
"It will be too much for mills to reach before the cane begins
to rot," said Nastari. "Their costs will also rise now because
they will try to harvest on many fronts to try to reach the
affected cane. This will require a lot of moving around of
equipment, which is expensive."
Sugar and ethanol companies such as Louis Dreyfus Biosev
SA, Odebrecht s ETH Bioenergia, and Cosan SA, Brazil s largest
sugar producer, will face higher costs and potentially smaller
Nastari said the cold that dropped to zero Celsius (32 Fahren-
heit) and below for at least two days last week, combined with
rain, has also reversed the normal composition of sugars in
the cane. This will cause mills to favor ethanol production
even more than they already have.
Mills use just less than half of the cane crop to produce
sugar and slightly more than half to make ethanol for the local
flex-fuel car fleet and to blend into gasoline.
"Now we have more glucose and fructose and less sucrose
in the cane, so mills will push for ethanol production over
sugar because they will have a hard time getting crystallization,"
he added. (Reuters)
Analyst: Frost damages nearly fifth of Brazil sugar cane crop
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