TCL creditors agree to 8-year repayment plan
Published:Wednesday | October 5, 2011 | 12:00 AM
Trinidad Cement Limited has reached a deal with the majority of its creditors that gives the struggling producer eight years in which to make good on its outstanding debt.
The package does not include the debts of subsidiaries Readymix West Indies Limited and TCL Packaging Limited, but company secretary Alan Nobie declined to clarify that and other issues relating to the agreement reached eight months after TCL stopped servicing its debts to negotiate a more manageable repayment schedule.
Chairman of Caribbean Cement Company Limited and director of TCL, Brian Young, said the agreement reached covered 75 per cent of creditors and that the cement group will now have to sell the plan to the other 25 per cent.
The rescheduling will have no real impact on Caribbean Cement's financials, he said, as the negotiated debt programme deals largely with liabilities on TCL's balance sheet.
Caribbean Cement was exposed to the degree that its assets were used as security for the TCL debt.
Some of that debt was incurred to fund the US$177 million expansion of Caribbean Cement.
TCL, in a public filing at the weekend, said it would resume interest payments in December 2012 on its long- and short-term debt, which at last disclosure amounted to TT$2.67 billion at June 2011, of which TT$2.2 billion, or 83 per cent, would have become due within a year.
The interest on the existing debt will be reset at 200 basis points or two percentage points higher effective January 14, 2011, when TCL suspended servicing its debts to work out a repayment plan with its primary creditors. Nobie declined to quantify what the payments would amount to ahead of planned meetings with bondholders.
"We are not in a position at this time to provide any additional information beyond what is in the notice. As indicated therein, the process is in the final approval and documentation stages," said the company secretary. "Meetings are to be convened with creditors and shareholders to obtain final approval, and legal documentation is being prepared," he said.
The eight-year programme will see TCL paying both principal and quarterly interest on the debt effective March 2013, with a 46 per cent bullet payment on outstanding principal five years in, at year 2018.
The deal broadly lengthens the profile of the existing debt on which the short-term obligations which are running at five times the long-term liabilities and were the most problematic for TCL in a depressed regional cement market. It requires TCL to pay a two per cent "acceptance fee", reconfigure the board of directors, and offer up new collateral.
"The group is required to provide new security to the currently unsecured lenders, as well as currently secured lenders, and maintain specific financial ratios and expenditure limits during the life of the re-profiled debt," said TCL's market filing. "Certain governance undertakings have been agreed with the steering committee, subject to final approval by shareholders, including the expansion of the parent board to include two new directors and requiring all directors to be subject to re-election every two years," it read.
TCL has offered no definitive date to finalise the agreement but said it hopes to complete the process in the "shortest possible timeframe".