Gov­ern­ment and Cli­co have de­cid­ed to sell the lo­cal in­sur­ance com­pa­ny’s en­tire 56.53 per cent share­hold­ing in Methanol Hold­ings (In­ter­na­tion­al) Ltd (MHIL), the Oman-based methanol pro­duc­er, to Switzer­land-head­quar­tered petro­chem­i­cal gi­ant Pro­man Group for the sum of US$347 mil­lion ($2.35 bil­lion), sources told Guardian Me­dia yes­ter­day.

The de­ci­sion by the par­ties to sell the block of shares to Pro­man, which is the mi­nor­i­ty 43.47 per cent own­er of MHIL, ap­pears to be a re­ver­sal of the Gov­ern­ment’s po­si­tion to ac­quire shares in MHIL, for it­self and for the Na­tion­al In­vest­ment Fund Hold­ing Com­pa­ny (NIF) with the bal­ance to be held by Cli­co. NIF is a whol­ly State-owned en­ti­ty.

On April 25, 2023, in a mo­tion on the ad­journ­ment brought by Op­po­si­tion Sen­a­tor, Wade Mark, Min­is­ter in the Min­istry of Fi­nance, Bri­an Man­ning, told the Sen­ate that Gov­ern­ment had ac­cept­ed an of­fer from Cli­co on Jan­u­ary 9, 2023, to pur­chase 19.63 per cent of the in­sur­ance com­pa­ny’s share­hold­ing in MHIL. The of­fer was ac­cept­ed by Gov­ern­ment at the val­u­a­tion price as part of the re­duc­tion of Cli­co’s debt owed to the Gov­ern­ment.

Man­ning said on Feb­ru­ary 21, 2023, NIF ac­cept­ed an of­fer from Cli­co to ac­quire 17 per cent of its share­hold­ing in MHIL at the val­u­a­tion price.

Cli­co would have re­tained 19.9 per cent of MHIL, which is the max­i­mum per­cent­age hold­ing per­mit­ted by the In­sur­ance Act of 2018.

Ac­cord­ing to Man­ning’s April 25, 2023, Sen­ate state­ment, “To date, Cli­co has signed share ac­qui­si­tion agree­ments and share trans­fer forms with the Gov­ern­ment of the Re­pub­lic of Trinidad and To­ba­go and NIF, but the share reg­is­ter of MHIL has not yet been amend­ed to re­flect the trans­fers.”

Prime Min­is­ter re­sponds

In a re­sponse to a ques­tion from the Guardian Me­dia yes­ter­day, Prime Min­is­ter Dr Kei­th Row­ley hint­ed that the sale of the shares to Pro­man may be part of a larg­er strat­e­gy to pro­mote in­vest­ment in the en­er­gy sec­tor.

Asked if he was aware that an agree­ment was reached last week to sell Cli­co’s shares in MHIL to Pro­man, and whether the trans­ac­tion was part of an om­nibus agree­ment with the Swiss com­pa­ny, Dr Row­ley said, “I am aware and sup­port­ive of the wider strat­e­gy of the Min­is­ter of Fi­nance to fos­ter and en­cour­age sus­tained in­vest­ment in Trinidad and To­ba­go.”

Con­tact­ed on Christ­mas Day, a Switzer­land-based spokesper­son for Pro­man said the petro­chem­i­cal com­pa­ny would not be com­ment­ing on its pur­chase of shares in MHIL.

His­to­ry of sale at­tempts

In its De­cem­ber 2022 re­port to the Cen­tral Bank, Cli­co out­lined that two pre­vi­ous at­tempts were made to sell its MHIL shares. The first of­fer was made to Con­sol­i­dat­ed En­er­gy Ltd, the Pro­man sub­sidiary, which has the right of first re­fusal to shares, in ac­cor­dance with the share­hold­ers’ agree­ment that set up MHIL.

The sec­ond at­tempt to sell the shares, ac­cord­ing to the re­port to the Cen­tral Bank, was with­drawn by both Cli­co and the liq­uida­tors of CL Fi­nan­cial in 2018.

More than four years ago, in his pre­sen­ta­tion of the 2020 bud­get on Oc­to­ber 7, 2019, Min­is­ter of Fi­nance, Colm Im­bert, strong­ly sug­gest­ed that MHIL shares would be part of NIF 2.

“Bar­ring un­fore­seen cir­cum­stances, I pro­pose to in­tro­duce in fis­cal 2020 a sec­ond Na­tion­al In­vest­ment Fund bond is­sue which will be based, among oth­er things, on the pro­ceeds from the sale of cer­tain shares held by Cli­co that are cur­rent­ly val­ued at $2.6 bil­lion,” said Im­bert.

Al­though he did not men­tion MHIL by name, the com­pa­ny was the on­ly one of Cli­co’s as­sets that was val­ued at close to $2.6 bil­lion in 2019. Cli­co’s 56.53 per cent of MHIL was, in fact, val­ued at $2.58 bil­lion in its 2019 an­nu­al re­port.

Asked at a news con­fer­ence on Au­gust 9, 2023, whether the MHIL shares were still part of his think­ing with re­gard to NIF 2, Im­bert said, “Not at this time,” ex­plain­ing that “there is a lot of con­fu­sion over the sale of those shares and I would not want the shares to be tied up. Any­thing to do with NIF, I would not want to be tied up in any sort of con­tro­ver­sy. We are go­ing to use oth­er shares to back NIF 2. For ex­am­ple, we have some ad­di­tion­al Re­pub­lic Bank shares that we are go­ing to give to NIF and there are some oth­er blue-chip as­sets that would be used to back NIF 2.”

At the news con­fer­ence, Im­bert alert­ed the pub­lic to his plan to bring NIF 2 by the end of De­cem­ber 2023.

The sale of Cli­co’s shares in MHIL is ex­pect­ed to re­sult in the in­sur­ance com­pa­ny ful­ly and fi­nal­ly re­pay­ing its debt to the Gov­ern­ment for the 2009 bailout. At a news con­fer­ence on De­cem­ber 6, 2022, for­mer ex­ec­u­tive chair of Cli­co, Claire Gomez-Miller, put the com­pa­ny’s debt to the Gov­ern­ment at $1.068 bil­lion, which she said would have been re­paid from the sale of the MHIL shares.

Val­u­a­tion of Cli­co’s stake in MHIL

In its au­dit­ed fi­nan­cial re­port for the fi­nan­cial year end­ed De­cem­ber 2022, Cli­co stat­ed that it de­ter­mined the fair val­ue of its share­hold­ing in MHIL us­ing a com­bi­na­tion of both the in­come and the mar­ket ap­proach­es.

The in­sur­ance com­pa­ny said both ap­proach­es were pre­pared us­ing in­puts spe­cif­ic to each to es­tab­lish ‘low’, ‘mid’, and ‘high’ im­plied en­ter­prise val­ues for each ap­proach. The re­sult­ing mid val­ue us­ing the val­u­a­tion method re­sult­ed in a “rea­son­able” val­ue for Cli­co’s share­hold­ing in MHIL of US$337 mil­lion.

Guardian Me­dia un­der­stands that US$337 mil­lion was the ini­tial price that Pro­man was will­ing to pay, but the com­pa­ny was con­vinced by the in­ter­ven­tion of the Min­istry of Fi­nance tech­nocrats to add an ad­di­tion­al US$10 mil­lion, which re­sult­ed in the fi­nal sale price of US$347 mil­lion.