Bertrand maintains CEMEX takeover offer too low

In a statement emailed to the media yesterday, Bertrand said based on his “rough valuation”, TCL’s diluted share value should be TT $7.71 while its undiluted share value should be TT $11.56.

Noting that the board’s 40-page Supplemental Directors’ Circular; published in the newspapers on Saturday, “revealed a “Fair Price Range” of $5.60 to $6.18,” Bertrand maintained that “their range is too low.” “(I) stick to my rough valuation, using TCL’s BDP (Best Demonstrated Performance) EBITDA (earnings before interest, taxes, depreciation and amortisation) of US $85 million with a valuation multiple of 7, to give a diluted share (375 million shares) value of TT$7.71 and undiluted share (250 million) value of TT$11.56,” Bertrand said.

The Supplemental Directors’ Circular included a Fairness Opinion from accounting firm, Ernst and Young (EY). The firm valued TCL shares at between TT$5.60 and TT$6.18 per share in a January 18 Fairness Opinion requested by the TCL board.

As reported in the Sunday Newsday, EY refused however to make an assessment of whether this is a fair price for the shares and have advised shareholders to obtain advice from investment professionals or lawyers. The company’s board has also directed shareholders to do the same, even though it has told them, outright, to reject Cemex’s amended offer made through its subsidiary, Sierra Trading. Saturday also saw the publication of an advertisement by Cemex, in which the Mexican building materials giant announced that it had surpassed the 50.01 percent threshold of shareholders acceptances. This represents one of the conditions needed to be met to complete its bid to acquire full control of TCL, something which Bertrand said “means that there will be no further increases in the offer price.”

“However,” Bertrand added, “one has to wonder about the theatrics of the move from $4.50 to $5.07, as if one examines Cemex’s “Availability of Funds statement” in its December 5th 2016 offer, Cemex had borrowed US$100 million to purchase 133 million shares suggesting that they intended making a final offer of around $5.13 but were just playing the game depending on shareholders’ resistance.”

Bertrand, who is also a TCL shareholder, described as “amusing” the decision of TCL Chairman, Wilfred Espinet, “to accept Cemex’s offer of $5.07”, saying this goes to the heart of his past criticisms of the Espinet-led board “who squandered all leverage by giving away the 20 percent Limit on shareholding for $2.90 per share to Cemex.”