An­tho­ny Wil­son

The be­sieged Clax­ton Bay-based ce­ment pro­duc­er, TCL, is fac­ing an es­ca­la­tion this month of long-stand­ing le­gal dis­putes with a ma­jor­i­ty of its share­hold­ers, who want to re­move six di­rec­tors, and with the union rep­re­sent­ing the ma­jor­i­ty of its work­ers over the pay­ment of back­pay.

Share­hold­ers hold­ing 54.7 per cent of TCL's or­di­nary shares have gone ahead and sched­uled a spe­cial (com­pul­so­ry) meet­ing of TCL share­hold­ers for Au­gust 19 at 5 pm at the Radis­son Ho­tel on Wright­son Road in Port-of-Spain.

The on­ly busi­ness of the spe­cial meet­ing is to con­sid­er and, if thought fit, pass res­o­lu­tions on the re­moval as TCL di­rec­tors of Andy Bha­jan (chair­man), Rollin Bertrand (CEO), Bevon Fran­cis, Car­los Hee Houng, Leonard Nurse and Bri­an Young.

If suc­cess­ful, the six TCL di­rec­tors would be re­placed by busi­ness­man Wil­fred Es­pinet; for­mer per­ma­nent sec­re­tary Al­i­son Lewis; Ja­maican busi­ness ex­ec­u­tive, Chris Dehring; UTC ex­ec­u­tive Nigel Ed­wards; Ce­mex en­gi­neers Fran­cis­co Aguil­era and Car­los Al­ber­to Palero; and Port-of-Spain at­tor­ney Glenn Hamel-Smith.

Among the share­hold­ers rep­re­sent­ing 54.7 per cent of TCL's shares who sup­port the move to re­shape the ce­ment com­pa­ny's board are its largest sin­gle share­hold­er, Mex­i­can ce­ment gi­ant Ce­mex; the Na­tion­al In­sur­ance Board; the Unit Trust Cor­po­ra­tion; and Re­pub­lic Bank.

The share­hold­ers req­ui­si­tioned the meet­ing pur­suant to Sec­tion 133 of the Com­pa­nies Act which per­mits the hold­ers of not less than five per cent of the is­sued shares of a com­pa­ny to call a meet­ing of share­hold­ers for the pur­pos­es stat­ed in the req­ui­si­tion.

The TCL share­hold­ers say that they went ahead and sched­uled the spe­cial (com­pul­so­ry) meet­ing fol­low­ing the re­fusal of the TCL di­rec­tors to call a com­pul­so­ry meet­ing of share­hold­ers af­ter they re­ceived a req­ui­si­tion on June 24.

TCL di­rec­tors re­ject­ed the ini­tial req­ui­si­tion be­cause they ar­gued that ac­cept­ing it would place them in jeop­ardy of be­ing held in con­tempt of court, as a re­sult of the in­junc­tion that was grant­ed in Ju­ly 2013 stop­ping the hold­ing of the 2012 an­nu­al meet­ing.

Le­gal sources say the TCL di­rec­tors will use this ar­gu­ment in an at­tempt to pre­vent the hold­ing of the spe­cial (com­pul­so­ry) meet­ing.

While TCL at­tor­neys are work­ing out strate­gies to block the de­mo­c­ra­t­ic will of a ma­jor­i­ty of share­hold­ers, an­oth­er set of the com­pa­ny's lawyers are fight­ing to pre­vent TCL from be­ing forced to pay $90 mil­lion in back­pay to the com­pa­ny's em­ploy­ees.

Last week, the In­dus­tri­al Court in Port-of-Spain re­ject­ed a re­quest by TCL that it be al­lowed to de­lay the im­me­di­ate pay­ment of the $90 mil­lion back­pay its owes to its Trinidad em­ploy­ees.

This is the sec­ond time the In­dus­tri­al Court has re­ject­ed the TCL ar­gu­ment that it be giv­en time to pay off the back­pay.

In award­ing a nine per cent wage in­crease over a three-year pe­ri­od to five bar­gain­ing units of TCL work­ers on June 27, the In­dus­tri­al Court or­dered "the pay­ment of ar­rears be ef­fec­tive on or be­fore Au­gust 8."

In June, the In­dus­tri­al Court judg­ment quot­ed TCL as ar­gu­ing that it should be al­lowed to make the back­pay pay­ments in four quar­ter­ly in­stall­ments.

Ac­cord­ing to the judg­ment, TCL ar­gued: "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 the re­ceivers.

"They re­quest­ed that the court al­low a rea­son­able time pe­ri­od for the com­pa­ny to pay any award­ed pay in­creas­es/back­pay to the em­ploy­ees and pro­posed four quar­ter­ly in­stal­ments."

In de­cid­ing that it was "un­able to ac­cede to the em­ploy­ers at this time," the In­dus­tri­al Court ar­gued: "We con­cur with the union that it is on­ly af­ter the court has made an award to in­crease the terms and con­di­tions of em­ploy­ment that a par­ty should ap­ply to change by ex­tend­ing the method of pay­ment backed by sup­port­ing ev­i­dence."

The court al­so con­clud­ed that a de­ci­sion on de­lay­ing the full pay­ment of back­pay could not be made with­out ev­i­dence of "the cal­cu­lat­ed quan­tum of the ex­pens­es aris­ing out of such award, the up-to-date fi­nan­cial po­si­tioM

Whether TCL pre­sent­ed such ev­i­dence be­fore the court last week could not be ver­i­fied.

OW­TU sources said TCL was at­tempt­ing to ap­peal the In­dus­tri­al Court rul­ing to the ju­di­cia­ry, but the com­pa­ny did not for­mal­ly re­spond to a re­quest for clar­i­fi­ca­tion on this is­sue on Thurs­day.

On the is­sue of TCL's abil­i­ty to make the $90 mil­lion back­pay pay­ment by Au­gust 8, com­pa­ny sources con­firmed that the com­pa­ny is mak­ing all pay­ments from the cash sale of its prod­ucts as no com­mer­cial bank will ex­tend over­draft fa­cil­i­ties to the ce­ment pro­duc­er.

In May, TCL said "it de­cid­ed to post­pone" an at­tempt to raise US$325 mil­lion on the in­ter­na­tion­al cap­i­tal mar­ket as it "awaits more favourable mar­ket con­di­tions." Of the US$325 mil­lion, US$295 mil­lion would have been used to re­pay ex­ist­ing debt, while US$30 mil­lion would have paid fees as­so­ci­at­ed with the of­fer­ing and been used to im­prove its work­ing cap­i­tal.

Re­spond­ing to a com­ment from Fi­nance Min­is­ter Lar­ry Howai in the Sun­day Busi­ness Guardian of Ju­ly 20 that he was hav­ing "night­mares" think­ing about the pos­si­bil­i­ty that TCL could be forced to seek pro­tec­tion from its cred­i­tors, TCL is­sued a no­tice on Ju­ly 24 stat­ing that since its debt-re­struc­tur­ing ex­er­cise in 2012, it "has met all six quar­ter­ly debt-ser­vic­ing pay­ments and is ful­ly com­pli­ant with all debt covenants."

The com­pa­ny said: "All pub­lic pro­nounce­ments to date have made men­tion of the fact that the com­pa­ny is steadi­ly im­prov­ing with­out any of the nor­mal pre­cur­sors to in­sol­ven­cy or bank­rupt­cy such as com­plaints from sup­pli­ers, re­quests by the com­pa­ny for waivers of covenants or ma­jor dis­rup­tions in the sup­ply of ce­ment."

In out­lin­ing the steps the Gov­ern­ment is tak­ing to im­ple­ment the Bank­rupt­cy and In­sol­ven­cy Act, Howai said he want­ed to use what he thought would be a pe­ri­od of rel­a­tive cor­po­rate nor­mal­cy and calm to im­ple­ment the in­fra­struc­ture of the law.

Howai said, "I was there feel­ing good that noth­ing com­pli­cat­ed was like­ly to come up. Now, of course, I am hav­ing night­mares that I could po­ten­tial­ly end up with this mas­sive thing that we nev­er en­vis­aged and I don't know if we have enough skills and ex­pe­ri­ence to deal with this as the first one."