Target on Lascelles... As CL Spirits defaults on bonds
Published:Sunday | July 10, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Troubled CL Financial Limited instructed Jamaican creditors on Wednesday that it would devise a payment plan by month-end for its US$240 million of notes in "default", according to Robin Levy, general manager of trustee, Jamaica Central Securities Depository (JCSD).
The payment options on the CL Spirits bonds could include cash or selling shares in CL Financial assets - including its local subsidiary, Lascelles deMercado and Company, in which it has an 86.89 per cent stake held mainly but not exclusively by CL Spirits Limited.
"CL needs to present a concrete proposal how they intend to pay out everyone. They are engaged in discussions with T&T noteholders with the Jamaican banks and will come back to the noteholders towards the end of this month to let us know exactly how they plan to do this," Levy said Friday in a phone interview with Sunday Business.
JCSD Trustee Services, a subsidiary of the Jamaica Stock Exchange (JSE), is the trustee for the noteholders and the banks that have lent money to CL in this deal.
"This is not a stock exchange matter. This is a JCSD trustee services matter," said Levy.
Lascelles is listed on the exchange. The stock closed at J$3.12 on Friday - which was also its gain for the entire week of trading - at J$303.12 per share.
CL group, which was taken over by the Trinidad government in January 2009, has delayed payment of its CL Sprits bond, which matured January 2010.
It bought time following a series of negotiations with stakeholders.
Sunday Business reached Trinidad-based trustees, RBTT Trustees, via telephone, but was instructed to contact CL Financial for comment.
The company, in turn, said that no one was immediately available for comment as management was out of office.
CL Spirits was the vehicle chiefly used by CL Financial to acquire Jamaican spirits conglomerate, Lascelles deMercado, as well as raise debt to help finance the US$9.25 per share deal that closed in July 2008.
"Both noteholders in Trinidad and Jamaica have been extending financing for a year and a half. All the discussions we are having now is how all the noteholders and lenders will be paid out," said Levy about the Wednesday meeting.
CL Financial has not been able to meet requirements for the servicing of the bond since 2009, according to Levy.
The Gleaner previously reported that this included a 150 per cent margin that the conglomerate was required to maintain as backing for bonds floated in 2008.
"CL has been in continuous breach since almost two years of that requirement," said Levy.
The JCSD and creditors have all agreed that the requirement "would never be rectified," he said.
"We are talking now about paying out the noteholders. The bond actually matured last January. So CL has been in default of repayment of those loans since last year January."
Levy declined to comment on the possible sale of assets.
"I cannot speak to that. CL has yet to present such a plan to noteholders."
CL Financial, before its financial breakdown, was the largest privately held conglomerate in oil-rich Trinidad.
Then led by principal shareholder Lawrence Duprey, the group went after Lascelles largely because of its flagship spirits company, J. Wray and Nephew Limited, and its Appleton Estate rum brand.
The Lascelles acquisition that was valued at around US$640 million to US$650 million has been fingered as one of the transactions that helped put CL into free fall alongside its regional insurance business, CLICO, forcing a government rescue of the conglomerate at the top of this year after Port-of-Spain determined that CLICO and CL were too big to be allowed to fail.
In 2009, the Trinidad government took control of the CL companies and Republic Bank, which was valued by assets at TT$41 billion, as well as oversight of Lascelles, whose balance sheet assets top J$34 billion.
Lascelles is now managed by a Trindad appointee, Fraser Thornton, who replaced William McConnell on July 1.