Home' Trinidad and Tobago Guardian : May 11th 2014 Contents MAY 11 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG3
Last week, TCL issued a statement in which
it said it proposed to issue senior secured
first lien notes for a total of US$325 million
($2.1 billion), some US$295 million ($1.9 bil-
lion) of which would be used to repay all of
its existing debt. The balance will be used
to pay the fees and expenses of the bond
issue and for working capital improvement.
For TCL, the Claxton Bay-based, regional cement producer,
the restructuring of all of its debt marks the chance for a new
beginning; free from the constraints of its existing creditors,
which include several local financial institutions, and the initial
"comprehensive re-profiling" of its debt.
The relationship between TCL---listed on the T&T Stock
Exchange---and its creditors has been strained since 2011 when
the cement company declared a moratorium on all of its debts.
TCL chief executive, Rollin Bertrand, has complained bitterly
about the usurious interest rates charged by the 2012 creditors
and sees this second restructuring as an opportunity to lower
the company s interest payments.
TCL s preliminary offering memorandum, which is labelled
"strictly confidential," states: "The company estimates that
the refinancing of its existing debt with the proceeds of this
offering could reduce its debt service payments by $175.8
million in 2015 and by $86.8 million in 2014, in each case
compared with 2013, with additional incremental liquidity of
$96.8 million from the refinancing afterpayment of all bor-
rowings under the Override Agreement...."
The 210-page document, which was leaked anonymously
to the Sunday BG, also stated that TCL "currently does not
have access to any short-term credit facilities including lines
for letters of credit." This means that all expenditure must be
covered from internally generated cash from operations.
Late last week, Dr Bertrand responded by e-mail to some
questions from ANTHONY WILSON in between road-show
meetings in North America. His comments have been lightly
Q: We note that TCL has chosen two Canadian and
a Jamaican firms to underwrite the US$325 million bond.
Were there no local companies who could have done
this or is the choice an indication of the breakdown in
the relationship between TCL and local financial insti-
A: This is not an issue about relationships, this is an issue
about capacity/appetite. In 2004 when TCL went to the
Trinidad debt markets to raise US$105 million, we had to get
the assistance of the IFC to syndicate the loan as the banks
were not willing to rise to that level of lending. TCL has long
recognised that the local debt/equity markets do not have an
appetite for more than US$150 million and we decided that
strategically, the group needs to explore other sources of capital
as the current debt/equity markets in the Caribbean are too
Is your statement about the capacity/appetite of T&T s
institutional investors a general point or does it pertain
specifically to US dollar offerings? It seems to me that
the Government has raised billions of TT dollars on the
local market over the last ten years and Neal & Massy
is currently seeking to raise $1.2 billion, which is being
underwritten by a local investment bank.
I am certain that there is no bank in Trinidad who would
underwrite a $2.1 billion bond offer in Trinidad by one company.
There are rules with respect to liability concentration that
would prohibit such a concentration. Comparing us to the
T&T Government is not reasonable. They are a sovereign with
sovereign guarantees and that is a risk-free investment.
Also, I am sure you would agree that the underlying macro-
economic factors in 2004 are quite different to those today---
very low interest rates and very high liquidity. Also, the insurance
companies/pension are looking for long-term, US dollar invest-
ments to allocate to their 20 per cent allowance. See above.
When do you expect the notes to be priced?
End of this week.
Would you not agree that TCL s financial performance
is tightly linked to the performance of its main markets:
T&T and Jamaica? If you do agree with that premise,
what would you say is the likelihood that both countries
will operate without a significant downturn between
now and 2021?
I think we will continue to see aggressive growth in Trinidad
and, to a lesser extent, in Jamaica especially with the logistics
hub coming on stream.
Continued on Page 7
TCL CEO on US$325m bond issue
New refinancing will
lower interest payments
DR ROLLIN BERTRAND
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