Advisers retained, TCL financial review under way
Published:Friday | February 25, 2011 | 12:00 AM
Trinidad Cement Limited (TCL) says FTI Consulting Canada ULC has been commissioned as independent adviser to the TCL creditor committee under the group's debt-restructuring programme.
TCL also said it has retained BroadSpan Capital LLC as its financial adviser in the exercise.
FTI's first job is "to assess the cash-generating capability, operations and structure of the TCL group and make appropriate recommendations to the creditor committee," the cement group said in a market filing Tuesday.
TCL is facing a liquidity crunch as cement sales fall and competition from imports erode its market share. Its current liabilities of TT$954 million at September 2010 had well surpassed current assets of TT$808 million, leaving it with insufficient coverage for short-term debt.
The company is short on cash, last reporting negative flows of TT$111 million.
TCL's long-term debt is now more than TT$1.5 billion.
Its finances weakened after its heavily debt-financed investment in the modernisation of its plants, including a US$177m spend on Caribbean Cement's Rockfort operation in Kingston.
The Kingston plant is now at about 1.8 million-tonne annual capacity after the upgrade, an 80 per cent increase from one million tonnes, but sold less than 740,000 tonnes of cement last year.
The FTI review, which began on Monday, February 21, will be finalised in a month. The process will include visits to TCL's main country operations in the region, which would likely include Caribbean Cement in Jamaica and Arawak Cement in Barbados.
Once the consultant's assessment has been accepted by the parties, the restructuring phase will begin, TCL said.
The FTI Consulting team, which is now in Trinidad — TCL operates out of Claxton Bay — is led by its Senior Managing Director Brock Edgar.
"The debt restructuring is intended to improve the group's long-term prospects and to provide for the full repayment of its indebtedness," the cement company said in its market filing.
TCL has suspended debt repayment until it works out its new turnaround plan.
The creditor committee com-prises the cement group's largest domestic and international lenders, who together account for 75 per cent of TCL's total debts.
Its short-term liabilities at September 2010 was more than TT$800 million
Trinidad Cement is facing cash flow problems, and its short-term debts of TT$808 million have surpassed its current assets of TT$954 million at September 2010.
The debt restructuring became necessary after TCL breached performance criteria on its short-term borrowings and current ratio.