Tuesday's special compulsory meeting of Trinidad Cement Ltd shareholders at a Port-of-Spain hotel may have left many of the attending shareholders feeling slightly let down by the lack of drama, but they would be gratified to know that they participated in some local corporate history and have cause to celebrate.That meeting will go down in T&T's financial history as the first time that a majority of shareholders of a publicly held company were successful in refashioning a board by using both the courts and the voting process.
At the end of the day, the 83 per cent of TCL's issued shares that voted to elect seven new directors did so not because there is a new vision for the company or due to the brilliance of the new board.Quite simply, they voted in a new regime at TCL because, collectively, they felt that doing so was in their best financial interest.
The movement of the company's shares in the last fortnight is the best indication of this as TCL's share price increased from $1.87 on August 8 to $2.97 at the close of trading yesterday. That means that TCL's market capitalisation–which is the company's issued shares multiplied by its share price–increased by $274 million in the space of two weeks.
Shareholders have bid to up the price of TCL's shares because they feel, perhaps instinctively, that the company's future is brighter without directors who waged a long and bitter legal battle against the owners of the company; who were at loggerheads with the company's representative trade union; who never had anything good to say about the financial institutions that lent the company money and who added to the financial pressure on customers when it hiked the price of cement by nine per cent in July.
The message from the TCL shareholders is elemental: people invest their money in companies because they feel that by doing so they will be rewarded financially in the long term.It follows, therefore, that those shareholders will seek out managers and directors who will help them achieve their financial goals.
The fact that the TCL share price has jumped is no guarantee that the company's fortunes will improve substantially in the near future.The new TCL board faces awesome challenges.It must fulfill the obligation outlined in the recent Industrial Court ruling that the company's Trinidad workforce is entitled to find $100 million in backpay and a nine per cent wage increase for the period 2009 to 2011.
It needs to restructure its $2 billion debt in order to remove the proverbial sword of Damocles that hangs over the company constraining its free cash flow and limiting its ability to grow.And the board needs to take a long, hard and decisive look at the operations in Barbados, where TCL must contend with a high wage bill and cost of fuel.
But more fundamental than the tough business decisions that have to be taken, the compelling mandate for the new faces at Claxton Bay must be to repair relationships with all of its stakeholders: the shareholders, trade union, creditors and the public at large.If the company can manage the relationship issues as well as it does the business issues, TCL will go a long way to earning pride of place as one of the region's manufacturing success stories.