Af­ter more than three years and four months of de­lib­er­a­tion, the ar­bi­tra­tion tri­bunal sit­ting on the val­u­a­tion of Point Lisas-based Methanol Hold­ings (Trinidad) Ltd (MHTL) has de­cid­ed that Cli­co's 56.53 per cent stake in the methanol com­pa­ny is worth US$1.175 bil­lion (TT$7.40 bil­lion).

The de­ci­sion of the three-mem­ber tri­bunal of the ICC In­ter­na­tion­al Court of Ar­bi­tra­tion, which was hand­ed down on Thurs­day, val­ued MHTL at US$1.4 bil­lion, but then ap­plied a 19.1 per cent liq­uid­i­ty dis­count to get to US$1.175 bil­lion, Gov­ern­ment sources told the T&T Guardian yes­ter­day. A liq­uid­i­ty dis­count is the low­er val­u­a­tion ap­plied to shares that are illiq­uid, or can­not be sold eas­i­ly or quick­ly.

The val­u­a­tion placed on MHTL by the tri­bunal was im­me­di­ate­ly de­scribed by Gov­ern­ment of­fi­cials as be­ing "sub­stan­tial­ly be­low the true mar­ket val­ue."The Gov­ern­ment had sub­mit­ted val­u­a­tions from three in­ter­na­tion­al in­vest­ment banks that in­di­cat­ed MHTL was worth be­tween US$1.6 bil­lion ($10 bil­lion) and US$2.2 bil­lion ($13.9 bil­lion).

The Gov­ern­ment had been count­ing on a favourable de­ci­sion of the ar­bi­tra­tion tri­bunal as it sought to re­cov­er about $20 bil­lion it pumped in­to the CL Fi­nan­cial em­pire in 2009 and 2010.On Jan­u­ary 30, 2009, the then Min­is­ter of Fi­nance Karen Nunez-Tesheira signed a Mem­o­ran­dum of Un­der­stand­ing with for­mer ex­ec­u­tive chair­man of CL Fi­nan­cial, Lawrence Duprey, out­lin­ing the terms of the then gov­ern­ment's in­ter­ven­tion to save Cli­co, Cli­co In­vest­ment Bank and British Amer­i­can In­sur­ance.

As a re­sult of the in­ter­ven­tion, Cli­co was put un­der the con­trol of the Cen­tral Bank, un­der the in­sti­tu­tion's spe­cial pow­ers to act if the fi­nan­cial sys­tem is threat­ened.Be­fore the in­ter­ven­tion, 49 per cent of MHTL was owned by Cli­co, 7.53 per cent by the in­sur­er's par­ent com­pa­ny, CL Fi­nan­cial, and 43.47 per cent by a group called Con­sol­i­dat­ed En­er­gy Ltd, com­pris­ing Ger­man com­pa­nies, Fer­rostaal, Pro­man and Helm.

Short­ly af­ter the in­ter­ven­tion, the 7.53 per cent held by CL Fi­nan­cial, along with a sim­i­lar per­cent­age held by Methanol Hold­ings (In­ter­na­tion­al) Ltd, the Oman-based methanol pro­duc­er, were trans­ferred to Cli­co to dis­charge a $1.1 bil­lion deben­ture that the in­sur­ance com­pa­ny held over its par­ent.That trans­ac­tion im­me­di­ate­ly caused fric­tion with the mi­nor­i­ty share­hold­ers, as it led to Cli­co be­com­ing the ma­jor­i­ty share­hold­er in its own right.

The Ger­man mi­nor­i­ty share­hold­ers were dis­turbed by the fact that Gov­ern­ment ac­quired a 49 per cent stake in Cli­co, in ex­change for $4.9 bil­lion worth of pref­er­ence shares, and that the Gov­ern­ment/Cen­tral Bank were in con­trol of the in­sur­ance com­pa­ny's board.

In May 2011, Con­sol­i­dat­ed En­er­gy Ltd trig­gered a clause in the share­hold­ers' agree­ment that es­tab­lished MHTL, claim­ing that the ac­tions of 49 per cent Gov­ern­ment-owned Cli­co and CL Fi­nan­cial–which was then con­trolled by the Gov­ern­ment–were op­press­ing them, the mi­nor­i­ty share­hold­ers.

In March 2013, the tri­bunal up­held the op­pres­sion claims of the mi­nor­i­ty share­hold­ers and in No­vem­ber 18, 2013, the tri­bunal con­clud­ed the suit­able rem­e­dy for this op­pres­sion was the sale of the 56.53 per cent share­hold­ing by Cli­co in MHTL to the claimants with­in a rea­son­able time.As out­lined in Cli­co's 2012 fi­nan­cial state­ment, the tri­bunal then gave MHTL's ma­jor­i­ty and mi­nor­i­ty share­hold­ers un­til the end of Jan­u­ary 31, 2014 to ne­go­ti­ate and agree the terms of sale.

If no agree­ment was reached, ac­cord­ing to the tri­bunal, it re­served the right at that time to set the price for the sale, fol­low­ing fur­ther sub­mis­sions by the par­ties, based on up­dat­ed mar­ket val­u­a­tions as at Jan­u­ary 31, 2014.The fi­nal price that the tri­bunal came up with was US$1.175 bil­lion.The de­ci­sion of the ar­bi­tra­tion pan­el is fi­nal as both sides agreed to be bound by it.

Cli­co has 14 days from the date of the de­ci­sion to trans­fer the shares to Con­sol­i­dat­ed En­er­gy Ltd, sources told the Guardian.

Howai must make state­ment

In a state­ment yes­ter­day, the Cli­co Pol­i­cy­hold­ers Group said the de­ci­sion of ar­bi­tra­tion tri­bunal means "the train has now of­fi­cial­ly left the sta­tion with re­gard to sale of this 'na­tion­al trea­sure' to its Ger­many-based mi­nor­i­ty own­ers.

In this re­gard, it is im­por­tant to note that MHTL is one of the largest methanol pro­duc­ers in the world, with a pro­duc­tion ca­pac­i­ty of more than 4 mil­lion met­ric tonnes an­nu­al­ly. It is al­so the largest sup­pli­er of methanol to North Amer­i­ca hav­ing sup­plied cir­ca 66 per cent of to­tal US methanol im­ports in 2013.

The CPG is there­fore deeply con­cerned by this de­vel­op­ment and is call­ing on the ho­n­ourable Fi­nance Min­is­ter Lar­ry Howai to im­me­di­ate­ly is­sue a com­pre­hen­sive state­ment on this mat­ter, in­clud­ing its im­pli­ca­tions for all stake­hold­ers and the coun­try go­ing for­ward.