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CIF initial offer ends December 14
Finance Minister Larry Howai yesterday described the exchange of bonds held by holders of short-term investment products issued by Clico and British American for units in the Clico Investment Fund (CIF) as an “excellent” idea. Howai was speaking at a news conference yesterday to launch the Clico Investment Fund (CIF), which will allow holders of short-term investments in the two insurance companies to swap their 11 to 20 year zero-coupon bonds for units in the CIF.
He said there is the potential for a 100 per cent uplift for those who choose to exchange their 11 to 20 bonds for units compared with those who opt to cash in those bonds. He also told reporters that those opting to exchange their 11 to 20 bonds for units will have the opportunity to do so at no cost until December 14.
By launching the CIF yesterday, Howai fulfilled a commitment he made in the 2013 budget. Holders of the zero-coupon bonds would be able to swap their 11 to 20 zero-coupon bonds at the rate of exchange of 40 units in the CIF for each $1,000 face value of their bonds.
This means that someone with an investment of $1 million would have received $75,000 in cash and $925,000 in 20 zero-coupon bonds, half of which can be exchanged for units in the CIF. The investor would end up with 18,500 CIF units at $25 each, which amounts to $462,500.
Howai said that at least 95 per cent of the dividend and interest income generated by the CIF, would be credited to the fund from November 1 and paid out in dividends twice a year: on February 21 and August 21. Holders of the CIF units would also be able to sell their units when the trust is registered on the T&T Stock Exchange in January, the Finance Minister said.
Howai clarified that the CIF would be fully capitalised with 40,072,299 shares of Republic Bank, worth $4.39 billion, representing 86 per cent of the assets of the CIF, and with 25-year, fixed rate government bonds with a coupon of 4.25 per cent accounting for the balance of $702 million.
He said it was the Government’s intention for the CIF to be fully capitalised with Republic Bank shares. A number of Clico’s Republic Bank shares were being held by Clico Investment Bank as collateral for loans to the insurance company. Negotiations are ongoing with the liquidator of Clico Investment Bank to allow those shares to be made available to Clico
“In the event that additional Republic Bank shares become available, these government bonds in the fund will be used to purchase additional shares in Republic Bank at fair market value at the time,” said Howai. The total value of the assets in CIF will be $5.1 billion, which will match exactly the liabilities owed to the Clico investors.
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