Last update: 07-Dec-2013 3:12 am
Saturday, December 07, 2013
Trinidad & Tobago Guardian Online
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Howai asks for another CLF pact extension
The Ministry of Finance is seeking yet another extension of the June 2009 shareholders’ agreement with the CL Financial group, Finance Minister Larry Howai disclosed last week. In an e-mail, Howai said the Ministry’s proposal for the settlement of CL Financial’s $19 billion debt to the Government had been considered by Cabinet. Howai said that Cabinet asked him to “engage the services of an international financial services advisor to review the proposal and provide the Cabinet with the results of its evaluation before Government gives it’s approval.”
The proposal that is currently before Cabinet envisages, using mid-range valuations, that the CL Financial shareholders would retain assets with an estimated value of $1.6 billion, while divesting $31.4 billion in assets, which would be used to settle third party liabilities of $16.3 billion and repay $15.1 billion of the $18.4 billion that the Government has agreed to accept. The proposal has been sharply criticised by commentators and faces serious opposition by several members of Cabinet.
Based on an Ernst & Young analysis that accompanies the Cabinet Note, CL Financial is insolvent as its liabilities at $34.7 billion exceed its assets of $33.1 billion. If the group’s assets were used to pay all the creditors identified in the Ernst & Young analysis, the creditors would receive 95 cents on the dollar, but there would be nothing left in the group for its shareholders. To facilitate the international financial services advisor reviewing the proposal and providing the Cabinet with the results of its evaluation, Howai “was asked to seek a further extension of time from the shareholders of the company.” If the request for a further extension of time is accepted by the shareholders, it would be the fifth time that the three-year shareholders agreement is being extended.
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