An­tho­ny Wil­son

In a press re­lease is­sued on April 9, 2010, Trinidad Ce­ment Ltd (TCL) ad­vised that it had re­ceived a for­mal no­ti­fi­ca­tion from its largest sin­gle share­hold­er, the Mex­i­can build­ing prod­ucts com­pa­ny, Ce­mex, that it wished to main­tain its 20 per cent share­hold­ing in TCL through its sub­sidiary com­pa­ny, Sier­ra Trad­ing. TCL share­hold­ers, ac­cord­ing to the state­ment, had been no­ti­fied in two pre­vi­ous re­leas­es that Ce­mex was plan­ning "to dis­pose of its TCL share­hold­ing as part of a debt re­struc­tur­ing pro­gramme and were in­formed about the ac­tion be­ing tak­en by the TCL board to pro­tect their in­ter­ests." On April 9, 2010, the day that TCL is­sued the state­ment about Ce­mex main­tain­ing its in­ter­est, TCL shares were trad­ing at $3.51. On Tues­day, TCL trad­ed at $1.74, which means that the val­ue of its shares has de­clined by more than half in less than two years. To put that de­cline in some per­spec­tive, the 49,953,027 TCL shares that Ce­mex owned, as at June 2011 when the 2010 TCL an­nu­al re­port was pub­lished, would have been worth $175.3 mil­lion on April 9, 2010, but to­day those shares are worth $86.9 mil­lion.

In­ter­est­ing­ly, the 2010 an­nu­al re­port al­so in­di­cates that Re­pub­lic Bank Ltd is the sec­ond largest TCL share­hold­er with 29,322,767 or 11.74 per cent of the re­gion­al ce­ment pro­duc­er. Re­pub­lic Bank has seen its stake in TCL de­cline in val­ue from $102.9 mil­lion on April 9, 2010 to $51 mil­lion on March 6, 2012. Re­pub­lic Bank, one-third of which is owned by the in­sol­vent in­sur­ance com­pa­ny Cli­co, is al­so a sig­nif­i­cant cred­i­tor to TCL and there­fore has a great in­ter­est in any cor­po­rate or fi­nan­cial changes that the ce­ment pro­duc­er may be forced to un­der­take. It is for Re­pub­lic Bank to clar­i­fy whether those shares are held in trust for pen­sion plans and oth­er in­sti­tu­tions or in the bank's name. The third largest sin­gle share­hold­er of TCL is the Na­tion­al In­sur­ance Board (NIB) with 10.16 per cent of TCL or 25,367,032 shares , which would have de­clined in val­ue from $89 mil­lion in April 2010 to $44.1 mil­lion in March 2012. For those who may have missed it, the NIB re­ceives con­tri­bu­tions from most of the work­ing peo­ple in this coun­try and pays out ben­e­fits (in­clud­ing pen­sion ben­e­fits) to thou­sands of peo­ple on a month­ly ba­sis. In­deed, there are many, many peo­ple who are ea­ger­ly look­ing for­ward to the in­crease to $3,000 in the month­ly pen­sion ben­e­fits they re­ceive from the NIB and there is a great deal of con­cern across the land about the con­tin­ued de­lay in these pay­ments.

Al­so of sig­nif­i­cance, in terms of their share­hold­ing in TCL, is the Unit Trust Cor­po­ra­tion, which as at June 2011 owned 11,214,455 shares in TCL, which would have de­clined in val­ue from $39.3 mil­lion to $19.5 mil­lion. Clear­ly, then, what hap­pens with TCL is of vi­tal im­por­tance to any­one who re­ceives a pen­sion from the NIB or makes a con­tri­bu­tion to the NIB and any­one who has an in­ter­est in the UTC's First Scheme (ei­ther di­rect­ly or in­di­rect­ly). The April 9, 2010, press re­lease is im­por­tant for two oth­er rea­sons: it in­di­cat­ed that Ce­mex had been look­ing to dis­pose of its TCL shares be­cause it was at­tempt­ing to re­struc­ture its debt (just as TCL is do­ing now) and, sec­ond­ly, that Ce­mex had changed its cor­po­rate mind and de­cid­ed to re­tain its TCL shares-even though it en­dured a painful en­gage­ment with its cred­i­tors. The first rea­son is im­por­tant be­cause it rais­es the is­sue of whether TCL has ever se­ri­ous­ly ex­plored the pos­si­bil­i­ty of sell­ing off any of its sub­sidiaries, such as Readymix, which is 70 per cent owned by TCL. The com­pa­ny's ex­ec­u­tives may ar­gue that the Clax­ton Bay-head­quar­tered com­pa­ny needs to main­tain its 100 per cent stake in the Bar­ba­dos-based, Arawak Ce­ment Com­pa­ny, and its 74 per cent stake in Ja­maica's Caribbean Ce­ment Com­pa­ny for strate­gic rea­sons. These rea­sons would in­clude, one imag­ines, the need to main­tain a lev­el of con­trol over its Caribbean mar­kets, which would not be pos­si­ble if Ce­mex were to ac­quire TCL's stake in Caribbean Ce­ment, which is based just out­side Kingston. Ce­mex would then have the pro­tec­tion of the Com­mon Ex­ter­nal Tar­iff and the deep pock­ets to en­gage TCL in a price war, which, while it would ben­e­fit T&T con­sumers of ce­ment, would hurt TCL.

But the fact that Ce­mex changed its mind about sell­ing its stake in TCL some­time in the first quar­ter of 2010 strikes one as be­ing very in­ter­est­ing as some of the in­sti­tu­tion­al in­vestors in TCL such as Re­pub­lic Bank, the Na­tion­al In­sur­ance Board and the Unit Trust Cor­po­ra­tion may have in­sti­tu­tion­al mem­o­ries that go as far back as 2002.

Ten years ago, Ce­mex made an of­fer to pur­chase at $5.70 a share for the 80 per cent of TCL that they did not own. That of­fer was re­vised to $7.15 per share. Lead­ing the charge to re­ject the Ce­mex of­fer in 2002 was Rollin Bertrand, who was then and is still TCL group CEO, and the TCL group chair­man, Andy Bha­jan. Lead­ing the charge to ac­cept the of­fer were Arthur Lok Jack, who was then and still is the chair­man of Guardian Hold­ings Ltd, and Steve Bideshi, who was then the CEO of Citibank T&T, but is now one of Fi­nance Min­is­ter Win­ston Dook­er­an's clos­est ad­vis­ers.

Both Lok Jack and Bideshi were mem­bers of TCL's su­per­vi­so­ry board. They were both forced out by Bertrand and Bha­jan, who went on to pre­vail in the fight to keep TCL in lo­cal hands.

The ques­tion is: would the TCL share­hold­ers have been bet­ter off if they had ac­cept­ed the $7.15 a share of­fer from Ce­mex than if they had held the shares for ten years while it de­clined in val­ue and the div­i­dends dried up? The oth­er ques­tion is whether ten years lat­er, Ce­mex would still be in­ter­est­ed in ac­quir­ing TCL and whether the de­ci­sion to hold on to its 20 per cent stake was part of some long-term think­ing by the Mex­i­cans? And the fi­nal ques­tions are: if Ce­mex were to make an of­fer, would Bertrand and Bha­jan re­sist the of­fer in 2012 in the way they re­sist­ed the of­fer in 2002? And what would the po­si­tion of the Oil­fields Work­ers Trade Union, which stout­ly op­posed the sale of TCL to Ce­mex in 2002, be to a new of­fer from Ce­mex in 2012...if one is to come?