Mar 2009 Financial News

10% of JMMB to go to T&T gov't

Mar 18, 2009

The Government of Trinidad and Tobago will take ownership of 10 per cent of Jamaican Money Market Brokers (JMMB) as part of its liquidity support and financial bailout of Trinidadian conglomerate, C L Financial, according to JMMB CEO Keith Duncan.

At the same time, one creditor of C L Financial, which will unlikely be repaid debts owed to it by the ailing conglomerate, is in discussions to take the remaining 30 per cent held by C L Financial.

In his address made in Ocho Rios at a seminar held by JMMB, Duncan said talks were "progressing well with a foreign company interested in buying 30 per cent, or approximately 440 million shares in JMMB currently held by C L Financial.

The financial institution, the name of which the JMMB CEO was unwilling to disclose, had loaned money to Clico and already had a presence in the Caribbean.

According to Duncan, it is a lack of a stake in the Jamaica business landscape, however, that is prompting the unnamed financial institution to pursue the interest in JMMB.

Duncan also added that the Trinidadian Government could consider selling its stake.

According to Trinidad Central Bank governor Ewart Williams, C L Financial approached the bank in early January for assistance after the conglomerate realised that a number of subsidiaries were facing liquidity problems.

Clico, a major insurance company headquartered in Trinidad and a major source of cash for the conglomerate, but more so Clico Investment Bank, had been facing liquidity problems since early January, having sustained high levels of withdrawals by shaky depositors who expressed concern over a sharp decline in methanol and real estate prices, two areas in which the C L Financial subsidiary has a high level of exposure.

The Government of Trinidad and Tobago is currently providing support.

For the takeover of the operations of Clico and British American Insurance Company, one of the main insurance companies in the Eastern Caribbean, and the provision of liquidity support by the government, C L Financial has agreed to divest additional assets to help fund a deficit now believed to be as high as TT$10 billion ($140 billion; US$1.6 billion).

Thus far, Caribbean Money Market Brokers and Clico Investment Bank (CIB) along with C L Financial's 55 per cent stake in Republic Bank Limited have been handed over to First Citizens Bank.

C L Financial will also give up its holdings in Methanol Holdings Limited, a methanol and ammonia producer, to the government.

The government has demanded that C L Financial make "all possible arrangements to place satisfactory levels of cash and other assets into the Statutory Fund in order to ensure the short- as well as medium- and long-term liquidity and stability of Clico".

C L Financial have amassed a large number of subsidiaries and associates over the years and in 2008 paid US$41.37 million to acquire 45 per cent of Caribbean Money Market Brokers Limited (CMMB) from Jamaica Money Market Brokers Limited.

The conglomerate also purchased 86.87 per cent in Lascelles and spent US$676 million on the total investment cost, including professional fees and other expenses and financed it by external debt financing in the amount of US$450 million at rates varying between 9.5 per cent and 10.5 per cent per annum.

Last year, the company also acquired 100 per cent of the share capital of Green Island Venture LLC, a real estate development in southern Florida in the US, the group paid a cash consideration of TT$1.9 billion of which TT$1.6 billion was borrowed.


Source:
Alesia Edwards
Jamaica Observer
Wednesday, March 18, 2009

http://www.jamaicaobserver.com/magazines/Business/html/20090317T220000-0500_147749_OBS_____OF_JMMB_TO_GO_TO_T_T_GOV_T_.asp