Tackling TCL debt
The TCL Group, the leading producer and marketer of cement in the Caribbean, has moved into the final approval and documentation stages of its debt-restructuring plans.
According to a notice addressed to shareholders and signed by the company’s board of directors, legal documentation was being prepared and “meetings of bond-holders would shortly be convened”.
According to the directors, a special general meeting of the company was also to be set up to inform shareholders of the terms and conditions of the restructuring.
“Additionally, shareholders’ approval will be sought for required amendments to the company’s organizational documents which will give effect to specific provisions of the debt-restructuring agreement. Every effort is being made to complete this process in the shortest possible time-frame,” the directors said.
Discussions and negotiations regarding a “reprofiling” of the company’s debt portfolio have been taking place with a steering committee comprising lenders who hold the majority of the group’s outstanding debt.
In the notice the company said agreement had been reached with the steering committee “on the terms and conditions of the debt reprofiling” which was subjected to final approval by the lenders’ credit committees and by TCL’s bond-holders.
“All of the Group’s short- and long-term debt, with the exception of those of Readymix (West Indies) Limited and TCL Packaging Limited, will effectively be converted into an eight-year facility with quarterly payments of principal, recommencing from March, 2013, resulting in a principal bullet payment of 46 per cent due in 2018,” the notice pointed out.
Interest payments would resume in December, 2012 and interest rates would be increased by 200 basis points effective January 14, 2011, with interest-hiked penalties from 2016 if certain “performance metrics” were not met, according to the notice.
“A two per cent acceptance fee is payable to lenders which together with unpaid interest will be added to the debt to be serviced. 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 reprofiled debt,” the TCL directors explained.
They also noted that certain governance undertakings had been agreed with the steering committee, with a provision for approval by shareholders.
The directors said there was to be an “expansion of the parent board to include two new directors and requiring all directors to be subject to re-election every two years”.
They said they remained confident that the completion of the debt-restructuring exercise would “improve the TCL Group’s long-term prospects”, resulting in a stronger business network.