Clico Policyholders Group is concerned that neither policyholders nor taxpayers will benefit from this US$338 million or TT$2.1 billion CL Financial (CLF) transaction and that the only beneficiaries locally are likely to be First Citizens Bank (FCB) and the Unit Trust Corporation (UTC). This is because notwithstanding the MOU and shareholders agreement, which were signed in 2009, between CL Financial and the Government to ensure that policyholders didn't lose any money, the reality is that CL Financial currently owns, directly or through subsidiaries, 86 per cent of the ordinary shares and 97 per cent of the preference shares in Lascelles deMercado and most, if not all, of the shares have been pledged to secure the indebtedness of the Group to bondholders.
Ironically, the bond in question was floated in 2008 to assist with funding for the purchase of the very same Lascelles that is now being sold. The two bondholders in Trinidad and Tobago are owed a total of approximately US$240 million (of which US$140 million and US$100 million are due to FCB and the UTC respectively) while certain banks and the other bondholders in Jamaica are owed approximately US$102 million. In fact, it's an open secret among members of the financial community in both jurisdictions that CL Financial has not been able to meet the requirements for servicing of the bond since 2009, this included a 150 per cent margin that the conglomerate was required to maintain as security for the bond.
CLF has been in continuous breach of this requirement almost four years now. More critically, the bonds actually matured in January 2010 which means that CLF has been in default of repayment since that time. According to the terms of the agreement not only do the bondholders have a first call on the security but the only options that are available to CLF to settle this debt is direct payment cash or via the sale of CL Financial assets – which include the Lascelles shares.
PETER PERMELL
Chairman
