Former CEO of Trinidad Cement Limited (TCL) Rollin Bertrand said the decision to reject the original takeover bid for the company made by Cemex in 2002 was done by board and shareholder approval and not by him directly.
According to Bertrand, when the offer was made in 2002, it was assessed by the then board of directors and subsequently rejected.
He explained: "On January 31, 2002, Cemex made a proposal to the TCL Board to takeover TCL subject to (i) an agreement for the board to support the bid (ii) the removal of the 20 per cent limit on shareholding (iii) a Minister's License and (iv) removal of any other regulatory obstacles. Cemex proposed a bid price of US$0.92 or TT$5.62 at prevailing exchange rate. This offer was analyzed by the Board and rejected."
Bertrand added that Cemex subsequently raised its bid price for TCL and this offer was also rejected by the board.
"Cemex subsequently revised their bid to $7.15 per share to acquire 100 per cent of TCL shares with the offer expiring on August 6, 2002. This offer was also rejected subject to the removal of the 20 per cent cap on shareholding and a Minister's License for Cemex to acquire the shares," he said
Bertrand said the TCL board undertook a valuation exercise and based on the findings determinded that Cemex's offer price grossly undervalued the company's shares.
"The TCL Board prepared a director's circular in conjunction with JP Morgan and–based on the analysis–recommended that shareholders reject the offer on the basis that the share was worth up to TT$10. JP Morgan conducted an Independent Valuation of TCL's shares using (i) Historical Share Prices (ii) Trading Comparables (FV/2001A EBITDA, FV/2002e EBITDA, FV/2003E EBITDA), (iii) Sum of Parts, (iv) Discounted Cash Flow Projections and (v) Precedent Transactions (Cemex's recent acquisition of Puerto Rican Cement)."
Bertrand said given the board's responsibility to act in the best interest of shareholders, a special meeting was held at which the shareholders rejected the offer for takeover by Cemex.
"Given the board's fiduciary duty to ensure that shareholders make the final decision on the takeover bid, an extra-ordinary meeting of the shareholders was convened to vote on the proposal including a resolution to remove the 20 per cent cap on shareholding. The resolution to remove the 20 per cent cap was rejected by shareholders when the vote fell short of the required 75 per cent hurdle," he said.