We would like to respond to some elements of a story, headlined, "CLF defers 46 per cent of Primera payment," published in the August Week One edition of Business Guardian.
Background
On January 30, 2009, CL Financial and the Government of Trinidad & Tobago (GORTT) entered into a Memorandum of Understanding (MOU) for the rehabilitation of Clico Investment Bank (CIB), Clico and British American (BA). On June 3, 2009 the then Minister of Finance Karen Tesheira advised that in keeping with the terms of the MOU she had no objection to the sale of the following subsidiaries provided that CLF applied the net proceeds from the sale transactions for funding the ongoing operations of CL Financial after the appointment of the new Board of Directors:
• Primera (Group) of Companies
• CL Marine Limited
• Clico Holdings Barbados
• Clico Suriname
• Clico Guyana
• Caribbean Resources Limited (Guyana)
In keeping with the above, on September 25, 2009, CL Financial appointed PricewaterhouseCoopers Limited (PwC) to provide an opinion as to the fair market value of each of the companies comprising the Primera Group. The purpose of the valuation exercise was to establish for the CL Financial Board an independent range of market values against which bids would be evaluated.
Under the terms of an engagement letter dated November 3, 2009, PwC was appointed to assist the CL Financial board with the divestment of the Primera Energy Group. Confidential Information Memoranda were distributed to 19 potential purchasers. A total of eight parties conducted due diligence and offers were received from ten parties. The ten offers received were evaluated and narrowed to three based on price, structure of bid, evidence of ability to secure funding and timeframe and conditions to close.
Responses
Paragraph 3 of your article states that 'The Primera bidding process is due to conclude on August 15'. Response: It should be noted that the bidding process has been closed and a definitive Share Purchase Agreement has been executed between Territorial Services Limited, a wholly owned subsidiary of Touchstone and CL Financial. The transaction is scheduled to close on August 15, 2011.
Paragraph 4 of your article states: "The payment of the balance, some US$23.3 million, has been deferred for two years CL Financial issuing vendor take back notes worth US$23.3 million at an interest rate of 8.0 per cent a year for two years. Paragraph 7 of your article states: "Primera East Brighton is the asset being used as collateral by CLF should Touchstone default on its payments." Response: It should be noted that the notes are secured by a first ranking debenture over all of the assets of the Primera Group and not merely the assets of Primera East Brighton Limited. It should also be noted that the note is a transferable instrument that can be disposed of, should CLF so choose to do at any point prior to the expiration of the maximum two-year maturity period.
Paragraphs 16, 17, 18 and 19 of your article states: "CL Financial went out for selective bids during the first tendering for Primera and secured five bidders Touchstone, Primera Energy Resources Ltd, Atlas Energy, Sogenia and Buccaneer Energy. "CL Financial accepted PERL's offer on April 5 with the expectation that the deal would be concluded in 14 days. "A non refundable deposit of US$35 million was paid. "On April 11, PERL was asked to retrieve its deposit"
Responses: The Confidential Information Memorandum advertising the sale of the Primera Group was distributed to 19 interested parties from eight countries. Subsequently eight of those parties performed detailed due diligence and ten submitted formal bids. Touchstone was selected as a preferred bidder on both the initial and subsequent bid rounds. At no point in time was a deposit (whether non-refundable or otherwise) of US$35 million received from any interested party.
Gerald Yetming
Chairman
CL Financial Limited