Home' Trinidad and Tobago Guardian : June 29th 2014 Contents JUNE 29 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG3
Financially troubled TCL is going ahead with a
nine per cent increase in the retail price of cement,
the company confirmed on Friday, the same day
the company lost a major wage battle in the Indus-
trial Court and days after the nine-member TCL
board received the news that a majority of the company s
shareholders want to dismiss six directors.
TCL plans to hike the price of a 42.5 kg bag of Premium
Plus Cement by nine per cent on July 1. That price increase
will take the price of a bag of cement, which currently sells
for between $57 and $60, to between $62 and $65.40.
On Tuesday, the company ran advertisements in two daily
newspapers, promoting its claim that "cement represents
approximately five per cent of your material costs" to build
a house. The percentage contribution of cement to the cost
of building a house is an argument that TCL has often used
in the past to justify increasing the price of its main product.
The last time TCL increased the price of cement was in
January 2013, when it increased the price of the commodity
by 9.5 per cent.
In the statement 18 months ago justifying the price increase,
TCL said that it had announced in July 2012 that a review of
prices would be conducted during the last quarter of 2012.
TCL said: "The decision was therefore predicated on this
analysis, which confirmed an increase in operating costs,
specifically in the areas of energy, packaging and spares for
which TCL as a price taker has no control." (See sidebar for
June 2014 rationale)
9 per cent wage increase
The Industrial Court on Friday ordered TCL to institute a
nine per cent wage increase for the period 2008 to 2011 for
four categories of the cement company s workers: hourly
rated/weekly paid; senior staff; confidential secretaries and
monthly rated. The wage award is for two per cent in the first
year, three per cent in the second year and four per cent in
the third year.
In arguments before the Industrial Court, TCL contended
that its workers should accept a three-per cent wage increase
for the three year period, which it had reduced from 6.5 per
cent. The representative trade union, the Oilfields Workers
Trade Union, had demanded a 12 per cent package.
The Industrial Court rejected TCL s arguments that it should
be allowed "a reasonable time period" for it to pay any awarded
TCL proposed four quarterly installments based on its sub-
mission "that all cash generated by them and the TCL group
was being used to meet the loan repayment requirements,"
according to the judgment s reporting to the employer s sub-
The court ordered that the payment of arrears be effective
on or before August 8.
The Industrial Court case arose out of a 90-day strike/lockout
at TCL from February 27 to May 26, 2012, which led to the
workers staying off the job for three months. The award by
the court is expected to cost the company millions in increased
recurrent expenditure plus a large backpay bill.
According to TCL s 2013 annual report, the group s debt
service (inclusive of principal and interest) is forecast to be
$368 million in 2014.
Last month, TCL postponed an attempt to raise US$300
million on the international capital markets as "some investors
requested modifications to the proposed coupon and covenant
The local company issued a notice on May 20, in which it
said that it proposed to "await more favourable market con-
ditions, which are expected in the near future."
Shareholders want six directors out
Some of TCL s largest institutional and individual share-
holders---comprising a majority of cement producer s issued
shares---have requisitioned the board of the financially troubled
company to call a compulsory meeting of shareholders to
remove immediately six of the company s nine directors.
The shareholders hold in aggregate 54.7 per cent of TCL s
issued shares and include the National Insurance Board, the
Unit Trust Corporation, Republic Bank, Tatil Life, a trust fund
account controlled by RBC and the company s largest single
shareholder, the Mexican cement giant Cemex.
Among the shareholders---all of whom signed documents
confirming their participation in the requisition---are some of
TCL s large individual shareholders such as Helen Bhagwansingh
and Stephen Espinet.
The six TCL directors who the shareholders want removed
are the chairman Andy Bhajan, the chief executive Rollin
Bertrand and directors Bevon Francis, Carlos Hee Houng,
Leonard Nurse and Brian Young. The three directors who are
not the subject of the requisition are Wayne Yip Choy, Alejandro
Cantu of Cemex and Jean Michel Allard of the International
The shareholders propose that after the six directors have
been removed, there should be an election to replace them
with seven new directors: retired permanent secretary Alison
Lewis, Chris Dehring, Wilfred Espinet, the UTC s Nigel Edwards,
Mexican engineer Francisco Aguilera, Panamanian engineer
Carlos Palero and Port-of-Spain attorney Glen Hamel-Smith.
The shareholders are taking the action under section 133 of
the Companies Act, which allows the holders of not less than
five per cent of the issued shares of a company to requisition
a shareholders meeting.
Section 133 requires directors to call a meeting if they are
requisitioned by shareholders, unless:
• a record date has been fixed under section 110(2) and
notice thereof has been given under section 112;
• the directors have called a meeting of shareholders and
have given notice thereof under section 113; or
• the business of the meeting as stated in the requisition
includes matters described in section 119 (b) to (e).
Those clauses personal grievances, similarity to previous
proposals and publicity seeking.
But the section 133 compulsory meetings exclude 119 (f),
which allows directors to block requisitioned meetings "where
the matter in the best judgment of the directors is inimical
to the commercial interest of the company."
The TCL board used this clause last year to deny an attempt
by shareholders---then representing 5.68 per cent of the com-
pany s issued shares---to nominate five directors for election
to the company s board.
A High Court judge on July 12, 2013 granted an injunction
restraining the holding of TCL s annual meeting and the matter
has been in court ever since.
Asked Friday night to comment of the requisition for a
compulsory meeting, TCL chief executive Rollin Bertrand said:
"As you know there is an active case before the High Court
between TCL and a group of shareholders. There is also an
injunction in place prohibiting the Board from holding its
annual shareholders meeting to elect directors.
"Given the overlap between parties and issues in these mat-
ters, the board is initially treating the recent initiative as part
of ongoing legal action and everything as subjudice. We are
awaiting an assessment from counsel before we make any
public statement or take any action to avoid being held in
contempt of court."
TCL faces new challenges
In providing a justification for the price increase, TCL
said in a statement Friday night:
"Continual increases in major cost components over
the last 18 months, but more so over the last 6 months,
freight rates, equipment spares, supplier services and
raw materials have increased significantly.
Improved operational efficiencies towards mitigation
of external rising costs
The company said that it has:
• Out sourced some non-core activities i.e. Packing
Plant and Quarry hence mitigating the escalating labour
• Installed an expert operator system on its kilns and
mills to reduce costs
• Automated aspects of its operations
Market Development -- TCL has commenced export of
oil well (Class G) cement to South America and is
pursuing other opportunities in Latin and South America
to increase revenue.
Industry price increases within the last 6 months
• Sharp Sand
• Clay Bricks
• Ready-mix Concrete 20%
• Concrete Blocks
"It is apparent that the entire local construction
industry has been experiencing increased operational
Independent studies by Quantity Surveyors have
shown that cement accounts for only 5% of building
material costs in the construction of a basic dwelling
TCL also argued that its prices "remain close to the
lower end of the tier when compared in a global
The company also offered all contractors registered
with the Trinidad & Tobago Contractors' Association
(TTCA) a three-month waiver of TCL's price increase for
fixed price contracts with their clients.
"This will allow them the opportunity to re-negotiate
their terms and minimize the impact," TCL said.
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