Friday, February 23, 2018


Govt seeks to recoup losses from $19b bailout

CL Financial (CLF) is hoping to raise more than $300 million with the private sale of two of the conglomerate's malls—Valpark Shopping Plaza in Valsayn and Atlantic Plaza in Point Lisas as well as the Holiday Inn Express, its hotel at Trincity.

The Express understands that a local conglomerate has also put in a bid to acquire the Long Circular Mall, St James and the Tru Valu chain of supermarkets.

The assets are all owned by Home Construction Ltd (HCL), which is a subsidiary of CLF.

The CLF empire, once owned by former insurance executive Lawrence Duprey, has been under Government management since January 2009.

The sale of the malls has not been advertised.

Instead, the Express learnt that CLF, currently chaired by former finance minister Gerald Yetming, engaged advisory firm Ernst and Young to invite selected bidders for the assets a few weeks ago.

The CLF board is set to meet tomorrow to determine the successful bidders of the assets.

"You couldn't put advertisements in the newspapers because people would believe there was a distress sale. Several businessmen have been in touch with us and have expressed an interest in certain assets.

"What we did is give the names to Ernst and Young and they went out to the market generally to scout for investors," a source close to the negotiations told the Express yesterday.

Questioned on whether the sale appeared selective and discriminatory, the source admitted: "Of course it was. We wanted to make sure we got the best opportunity to get the best price. For instance, with the sale of Holiday Inn, Ernst and Young went abroad as well as to the local market.

As it is, many people believe there is a distress sale. People are calling and asking when we are selling assets. There is a limited group of people with capital and we don't have the capacity or access to everybody who has an interest," the source explained.

The Express understands that bidders were selected based on their interest in the investment market. Among those bidders were the ANSA McAL Group of companies, Issa Nicholas Holdings Ltd, the Hadeed Group of Companies, MovieTowne's Derek Chin, Bhagwansinghs and the Gopaul Group of Companies.

The Express understands that at least five companies put in bids for the Valpark property.

Asked if the sums expected from the sale seemed low for the assets, the source explained that HCL had already done valuations on the properties so they had a fair idea about what they expected.

In September last year, CLF sold the Jamaican sprits company Lascelles de Mercado (LdM) for US$546 million, which was initially purchased by CLF for US$700 million.

Then, CLF had hired UBS Investment Bank out of New York as its exclusive financial advisor which subsequently invited 20 international companies for bids.

This multi-million-dollar transaction was broken into two parts: Campari would acquire the spirits part of the business for US$415 million at US$4.32 per share for the ordinary units and US$0.57 for the preference shares while all other LdM interests would be divested for about US$80 million.

Since the Shareholders Agreement between the Government and CLF shareholders was signed in June 2009, the government has sought to recoup its investment from the illiquid company. Finance Minister Larry Howai said the government has spent some $19 billion on the CLICO bailout and another extension to that Shareholders Agreement was negotiated for the government to recoup some of the sums owed.

Three State entities—the Unit Trust Corporation (UTC), the National Insurance Board (NIB) and banking group First Citizens—were beneficiaries of the Lascelles sale.

In 2011, CLF's energy company Primera was the first asset to be sold to Canadian oil company Touchstone Exploration Inc for US$50.7 million (TT$326 million).

Primera has 16 oil and gas properties comprising seven onshore producing oil and gas properties, one onshore exploration property, one offshore exploration property and seven undeveloped properties.

The Government intervened and bailed out CLF in January 2009. The Shareholders Agreement allows the sale of CLF assets to pay off CLICO policyholders.