Cemex moves to take control of TCL

The share price of TCL stock closed at $5.50 in trading on the Trinidad and Tobago Stock Exchange yesterday, up fifteen cents from its opening price of $5.35.

The stock closed at $3.38 on December 1, 2016, gaining 13 cents in that day’s trading. Sierra Trading on Monday January 9, 2017, announced a change to its takeover bid for TCL, increasing its price to TT$5.07, which it said was a fifty percent premium and including the option for shareholders in this country and in Jamaica to be paid in US dollars by February 3.

Espinet hailed the achievement, saying the management which replaced former Chief Executive Officer Dr Rollin Bertrand, had taken a company which was on the brink of bankruptcy and managed to get all the stakeholders together to correct the situation which existed. He said the management succeeded in getting banks to agree to accept a reduced debt payment if the company settled the debt, they got the shareholders to agree to contribute to the shoring up of the depleted equity of the company and got employees to agree to give up part of the claim that was due to them following a court order.

“What shareholders benefited from was that at the time that the process started it was originally trading at 95 cents when I came on the scene and by the time we got into it it was in the $2.00 range but albeit people were excited that something was taking place.” He said that shareholders who had invested in the rights issue or who had held onto their shares had seen growth.

However, Dr Bertrand said what happened yesterday was merely a culmination of earlier steps such as the removal of the Board of Directors and executive management of TCL and the rights issue that diluted shareholders’ value and gave CEMEX management control “and now they are just mopping up.” He said “who knows where they will get to by the end of the week.” Dr Bertrand said even the acquisition of control of the company will not be the final chapter. He said the final chapter will be the buying out of the minority shareholders and delisting the company. “And then the TCL Group will wither on the vine.”

He said TCL had added shareholder value through expansions and acquisitions and such growth which he said will no longer take place because CEMEX is already big in the Caribbean and now that they have control of TCL which gives them control of the Eastern Caribbean. He said the company has spare capacity in the bigger countries such as the Dominican Republic and they are also into Columbia. “So these plants in the Eastern Caribbean, once the plants get to a certain stage, they will just mothball them, close them down and supply from larger plants in the Northern Caribbean.”

But Espinet said that made no sense because it was CEMEX which had come to the rescue of the company when it was failing and could have simply let the group collapse if it wanted. CEMEX has said that the offer is conditional on Sierra acquiring at least an amount of TCL shares that would allow CEMEX, for financial reporting purposes, to consolidate TCL. It said that if the offer, as amended by the Amended Offer, is successful, TCL will continue operating as usual and will be maintained as a publicly listed company on the Trinidad and Tobago Stock Exchange.