Pyra Mountain will be a major surprise if successful in the Maiden Stakes over six furlongs of ‘good to firm’ Glorious Goodwoood this afternoon, first of five days on the famous, picturesque,...
You are here
TCL asks for extra time to pay $90 mn backpay
TCL chief executive, Rollin Bertrand, has admitted that the financially troubled local cement producer does not have $90 million “stockpiled” to meet its backpay commitments to its employees, which the Industrial Court ordered the company to pay by August 8.
In an exchange of e-mail with the Sunday BG on Thursday and Friday, Bertrand said that TCL is proposing that the backpay should be paid in installments and that the cement company wants to “sit with the union and develop a payout schedule that can be handled by the cash-flow projections.”
Asked what would be TCL’s position if the Oilfields Workers Trade Union (OWTU), which represents TCL workers, insists that the company abide by the terms of the June 27 Industrial Court judgment, which ordered that backpay should be paid by August 8, Bertrand said:
“The Union cannot insist because the debt is not between the company and the union. The debt is to individual employees. For the past six months, management has been meeting with employees advising them that the payment will be made over a period just as it has done for many collective agreements in the past.
“We have never made back-pay payments in one lump sum because they are always material since agreements are normally several years old. This is also the case in our companies in Jamaica and Barbados. We have a sensible workforce who we are confident will work with us on this matter.”
Responding to Bertrand’s position, OWTU president general Ancel Roget said the trade union felt vindicated by the ruling of the Industrial Court in the TCL matter. Roget said: “We insist that the Industrial Court judgment on this matter be followed to the letter as workers deserve their retroactive payments.
“We vehemently disagree that the company does not have the ability to pay workers their backpay, especially in the context of the company’s wastage of money at the plants and the company’s squandermania in paying lawyers huge sums of money.
“We are calling on the shareholders and creditors of TCL to take stock at how the company is being managed by the CEO and top management and we are reinforcing our call for the dismissal of Bertrand and the entire top management of the company who have the company in the position it is in.”
Roget also said that it was “wrong and unlawful” for the company to bypass the recognized bargaining union and negotiate directly with the workers and that he would have more to say on TCL matters when the union holds a news conference. The Industrial Court heard TCL’s arguments that it should be allowed to pay the backpay in installments in the Industrial Court matter involving the wage dispute for the 2008 to 2011 period; that dispute resulted in the TCL workers staging a 90-day strike in 2012.
In its judgment, the Industrial Court summarized TCL position in this way: “A review of the audited financial statements would confirm that there was no cash allocated or put aside in a bank account to meet any backpay payments to employees. “Currently, all cash generated by the TCL group was being used to meet the loan repayment requirements. Failure to meet the quarterly payments would result in the TCL group being declared insolvent and the business placed in the hands of receivers.
“They requested that the Court allowed a reasonable time period for the company to pay any awarded pay increases/backpay to the employees and proposed four quarters installments.” The Court said TCL’s position was premature as arguments for delayed payments should only be made after a wage award has been made by the Court and such arguments should be backed by “supporting evidence.”
In an e-mail to the Sunday BG, Bertrand insisted that TCL had made adequate provision for the $90 million backpay but that there was a difference between the cashflow implications of the payment and the potential profit and loss impact.
...responds to articles in BG
The TCL Group wishes to clarify recent articles, headlined “TCL Faces New Challenges” and “Will TCL Directors Stay”, which appeared in the Business Guardian editions of Sunday, June 29 and Thursday, July 3, 2014 in that order.
Industrial Court Ruling
• As far as the Industrial Court is concerned, TCL did not “lose” the case, as the company always wanted the matter to go before the Court rather than deteriorate in industrial action. TCL’s final position was 7.5 per cent while the Union’s final position was 12 per cent; the Court ruled at 9 per cent - which cannot be interpreted as a loss. TCL has made adequate provision for this ruling and will have discussions with the Court and the Union about a phased payout, notwithstanding the Court’s deadline of August 8, 2014.
In the second article, there seemed to have been a distortion of the facts related to the ruling and TCL’s ability to stay in business and it was inaccurately stated that TCL “did not make any provision” for an increase in salaries/wages in its 2012/13 financial statements when in fact, the TCL balance sheet has $500 million for payables and accruals, which include the back-pay. TCL will have to back-pay around $90 million, which it will generate over the next year, while ensuring that it meets all other financial obligations.
Debt Servicing and Financial Position
• The company has honoured all its debt servicing quarterly payments since December 2012 and is fully compliant with all covenants under the Override Agreement with its Lenders. TCL is generating adequate cash flow to pay all its obligations (including back-pay) and projections show that each will be met into the future. All payments have been made on time with comfortable cash balances after each quarter. Markets are improving and the company has made important breakthroughs in new markets such as Brazil, Venezuela, Martinique and Colombia.
• TCL postponed its debt restructuring in the HY Capital Markets after it was convinced that a return to these markets with a slightly different strategy would be more successful. TCL’s recent offer to the HY market was oversubscribed after a successful roadshow to the US and Canada. It is therefore puzzling that it was described in the article as an “ambitious roadshow”.
• Upon examination of the company’s financial statements over the past three years, one would clearly realize that its financial position has improved significantly. Revenues are back up to pre-crisis levels of US$300 million, EBITDA margins at up to 20 per cent and the company has made major breakthroughs into new markets. Why then would someone “run to the High Court” with a writ of bankruptcy in 2014 when that was not done in the period 2010-12?
• TCL declared a moratorium in 2011. It was made in conjunction with the Lenders and as such, the company was not “daring” anyone to declare it bankrupt. Additionally, creditors capitalized all interest foregone during the period of the moratorium and added 200 basis points to overall interest. That debt restructuring was very “creditor friendly”.
• The re-interpretation of the attempted takeover by Cemex in 2002 is also misinformed. There is no way that Bertrand and Bhajan with less than 1 per cent of shareholding between them could have “kept TCL local”. It was kept local by the judicious thinking of employees, minority shareholders, the OWTU and the management of the company who have confidence that Caribbean people can manage their own affairs and develop World Class companies in the region. Sadly, the old colonial mentality is still pervasive and continues to push an agenda for foreign ownership of all our major businesses.
• TCL’s recent price increase was implemented to cover general inflation. The company is confident that it will manage its labour costs through a combination of manpower rationalization, technological improvements and outsourcing. This has been the company’s strategy for the last decade when it was able to absorb increases in salaries and wages that were higher than 9 per cent.