EDITORIAL - T&T gov't must speak clearly on Lascelles

It is time for the Trinidad and Tobago (T&T) government to do some plain speaking about its valuable pieces of previously privately held Jamaican assets that have ostensibly fallen into its hands, which are important to production and jobs in this country's economy, but over which the administration in Port-of-Spain has dithered for nearly three years with potentially worrying consequences for many stakeholders.

Indeed, if the T&T government is constrained in how it can act for legal, political or other reasons, it must say so, thereby providing noteholders of the Lascelles deMercado (LdM) group with information with which they can arrive at sensible decisions about their assets.

Lascelles is the parent of J. Wray & Nephew, the distiller which owns the famous Appleton and other rum brands that have expanded globally in recent years. The company also owns the Appleton sugar factory and estates, which are integrated into the rum operations, and are among the few efficient and profitable sugar companies in Jamaica. LdM's other assets include insurance companies, airport cargo handlers, motor car dealerships, and commodities distribution.

Voting control

Three years ago, Lawrence Duprey's CL Financial acquired Lascelles deMercado. Given Lascelles' complex share structure, which gave voting control to its then chairman, George Ashenheim, and CEO, William McConnell, Duprey needed the support of these two men for the acquisition to happen. He paid US$676 million for approximately 87 per cent of Lascelles, which became a subsidiary of CL Spirits, CL Financial's drinks subsidiary.

To help pay for the acquisition, Duprey raised US$324 million on the Jamaican and Trinidadian bond markets and backed these notes with LdM's shares held by CL Spirits and CL Financial. However, a year after the Lascelles takeover, CL Financial faced a liquidity crisis as its insurance and investment banking operations were unable to meet their obligations to policyholders and investors. The T&T government took control of CL Financial, and with it came Lascelles deMercado.

However, CL Spirits, while it has made interest payments, has defaulted on the redemption of Lascelles' bonds. Now, a group led by Mr McConnell, using a vehicle called Black Sand, wants bondholders to foreclose and offload the acquired shares to it - a move that would give it LdM at a cost of less than half of what Duprey paid three years ago.

The Lascelles board described the Black Sand move as highly speculative and "opportunistic", and highlighted Mr McConnell's very recent incumbency of the company. Bondholders have given CL Financial until the end of September to offer a new payout regime. However, assuming it has control of the CL Financial assets - and there is no reason to believe it doesn't - the Trinidad and Tobago government could send Mr McConnell and his team packing by providing the cash to pay the bondholders.

If it doesn't, it should explain, including to the T&T taxpayers, why it would risk losing this valuable asset for a debt that a board, on which it has majority appointees, believes is a fraction of the real value of the company.

There is another important reason why Jamaica should pay attention to this saga. However, it seems the Lascelles group will be broken up and sold off in bits. The Appleton brand would likely survive and be forever associated with Jamaica. But its products need not be manufactured here.