More than 15 years af­ter the Cen­tral Bank as­sumed con­trol of Cli­co, the in­sur­ance com­pa­ny de­clared a div­i­dend of $1 bil­lion, which will go to its main share­hold­ers, its par­ent com­pa­ny CL Fi­nan­cial with 50.85 per cent and Cor­po­ra­tion Sole with 49 per cent.

The div­i­dend, de­clared by Cli­co on Sep­tem­ber 23, is the first time the com­pa­ny has made such a pay­ment to its share­hold­ers, sources close to the com­pa­ny told the Sun­day Busi­ness Guardian on Fri­day night.

The news of the Cli­co div­i­dend is con­tained in the 13th re­port of the joint liq­uida­tors of CL Fi­nan­cial, who are em­ploy­ees of the British Vir­gin Is­lands of­fice of the pro­fes­sion­al ser­vices firm, Grant Thorn­ton. Min­is­ter of Fi­nance ap­plied to the High Court in 2017 to have CL Fi­nan­cial wound up and a liq­uida­tor ap­point­ed.

In the re­port, the joint liq­uida­tors said, “The por­tion of this div­i­dend at­trib­ut­able to CL Fi­nan­cial’s 50.85 per cent share­hold­ing in Cli­co will be dis­bursed to CL Fi­nan­cial be­tween Oc­to­ber 2024 and De­cem­ber 31, 2024.”

The re­port states that CL Fi­nan­cial ex­pects to re­ceive $507 mil­lion from the Cli­co div­i­dend, but 50.85 per cent of $1 bil­lion is $508.5 mil­lion.

Al­though the joint liq­uida­tors do not out­line the mon­ey go­ing to Cli­co’s oth­er main share­hold­er, Cor­po­ra­tion Sole is ex­pect­ed to re­ceive about $490 mil­lion from the $1 bil­lion div­i­dend.

Cli­co will pay the $1 bil­lion div­i­dend from its ac­cu­mu­lat­ed sur­plus, which to­talled $3.18 bil­lion as at De­cem­ber 31, 2023.

Most of the in­sur­ance com­pa­ny’s ac­cu­mu­lat­ed sur­plus came from the sale on De­cem­ber 22, 2023, of its 56.53 per cent share­hold­ing in Methanol Hold­ings In­ter­na­tion­al Ltd (MHIL) to Con­sol­i­dat­ed En­er­gy Lim­it­ed (CEL), a whol­ly owned sub­sidiary of the Switzer­land-based Pro­man Group, which is the sin­gle largest ten­ant on the Point Lisas In­dus­tri­al Es­tate.

Cli­co’s 2023 au­dit­ed fi­nan­cial state­ment states, “Pro­ceeds of the sale of sub­sidiary, net of cash dis­posed and di­rect cost was $1.56 bil­lion. By this trans­ac­tion Cli­co ef­fec­tive­ly re­lin­quished con­trol of MHIL and the group recog­nised a gain of $1.99 bil­lion on the sale.”

The gain on the sale of the dis­pos­al of MHIL re­sult­ed in Cli­co’s af­ter-tax prof­it to­talling $2.30 bil­lion in its fi­nan­cial year end­ed De­cem­ber 30, 2023.

In his Sep­tem­ber 30, 2024 bud­get state­ment, Min­is­ter of Fi­nance Colm Im­bert, said the sale of the Gov­ern­ment’s 49 per cent stake in Cli­co was one of the “spe­cial projects” the Gov­ern­ment in­tend­ed to em­bark on in the 2025 fis­cal year.

“Cli­co is no longer con­sid­ered to be of strate­gic im­por­tance to the Gov­ern­ment and its di­vest­ment will earn sev­er­al bil­lion dol­lars in rev­enue for the Gov­ern­ment, to see us through the fi­nan­cial dif­fi­cul­ties of the next few years,” Im­bert told the Par­lia­ment in his five-hour-and-43 minute bud­get pre­sen­ta­tion.

In their re­port, the joint liq­uida­tors said they are “still tak­ing steps to con­sid­er the sale of the Com­pa­ny’s ma­jor­i­ty in­ter­est in Cli­co.

“As part of the prepa­ra­tion for the sale of the CL Fi­nan­cial’s Cli­co shares, the joint liq­uida­tors have been re­view­ing as­pects of the Cli­co port­fo­lio, while they await the de­ter­mi­na­tion of the agree­ment that had pre­vi­ous­ly been en­tered in­to when Cli­co was un­der the con­trol of the Cen­tral Bank of Trinidad and To­ba­go.” No de­tails of the agree­ment were pro­vid­ed in the joint liq­uida­tors’ re­port.

In the re­port, which is dat­ed Oc­to­ber 16 and was stamped by the High Court on Oc­to­ber 17, the joint liq­uida­tors say the doc­u­ment “specif­i­cal­ly com­ments on our ac­tiv­i­ties and find­ings in the pe­ri­od from 20 Oc­to­ber 2023 to the date of this re­port. For the pur­pos­es of this re­port, all ac­count­ing in­for­ma­tion will be pre­sent­ed from Ju­ly 1, 2023 to June 30, 2024.”

New bid for Trinci­ty Mall

On the is­sue of the Trinci­ty Mall, the joint liq­uida­tors said, “The pre­ferred bid­der, who was se­lect­ed as part of the ini­tial bid process, has with­drawn from the sale pri­or to ex­e­cut­ing the sale and pur­chase agree­ment.”

The pre­ferred bid­der was iden­ti­fied as the ANSA McAL group in the April 7, 2024, edi­tion of the Sun­day Busi­ness Guardian.

“In light of this de­vel­op­ment, Ernst and Young (in its ca­pac­i­ty as bro­ker), has fa­cil­i­tat­ed a new bid process, with the dead­line for sub­mis­sion of in­dica­tive bids hav­ing been Sep­tem­ber 16 2024.

“The joint liq­uida­tors have con­sid­ered the in­dica­tive bids and fur­ther due dili­gence by the prospec­tive pur­chasers is on­go­ing with the fi­nal bind­ing bids to be pro­vid­ed by 22 No­vem­ber 2024.”

The re­port states that any of­fers re­ceived low­er than the min­i­mum sale val­ue ap­proved by the High Court, will re­quire the joint liq­uida­tors to ap­ply to the Court for ap­proval to com­plete the sale.

“An is­sue that has emerged dur­ing the sales process is that cer­tain lands on which Trinci­ty Mall was con­struct­ed are owned by dif­fer­ent en­ti­ties with­in the CL Fi­nan­cial Group, ne­ces­si­tat­ing the con­sol­i­da­tion of the lands in­to a sin­gle en­ti­ty on a tax-ef­fi­cient ba­sis,” said the joint liq­uida­tors’ re­port.

“Progress is be­ing made in col­lab­o­ra­tion with the com­pa­nies, the JLs, and at­tor­neys work­ing with the Board of In­land Rev­enue to con­sol­i­date the lands,” the re­port added.

How Cli­co fell

At a news con­fer­ence at the Cen­tral Bank on Jan­u­ary 30, 2009, then Cen­tral Bank Gov­er­nor Ewart Williams an­nounced that both Cli­co and its sis­ter com­pa­ny Cli­co In­vest­ment Bank (CIB), had been fac­ing liq­uid­i­ty chal­lenges over the past few weeks.

“These chal­lenges came to a head in the last few days when CIB be­gan to face an un­usu­al­ly high lev­el of with­draw­al re­quests which put a strain on their avail­able liq­uid re­sources. Cli­co has al­so been fac­ing liq­uid­i­ty prob­lems, though nowhere near the lev­els of CIB. Of course, giv­en the close in­te­gra­tion of these two fi­nan­cial in­sti­tu­tions with­in the CL Fi­nan­cial Group, it is just a mat­ter of time be­fore Cli­co al­so be­gan to come un­der se­vere liq­uid­i­ty pres­sures,” Williams said.

He said that, in the Cen­tral Bank’s view, the cur­rent fi­nan­cial dif­fi­cul­ties be­ing faced by CIB and Cli­co had to do with fol­low­ing is­sues:

“• Ex­ces­sive re­lat­ed-par­ty trans­ac­tions which car­ry sig­nif­i­cant con­ta­gion risks. I should note that the high lev­el of con­cen­tra­tion is not specif­i­cal­ly pro­hib­it­ed by the present leg­is­la­tion;

• An ag­gres­sive high in­ter­est rate re­source mo­bil­i­sa­tion strat­e­gy to fi­nance equal­ly high risk in­vest­ments, much of which are in illiq­uid as­sets (in­clud­ing re­al es­tate both in Trinidad and To­ba­go and abroad);

• A very high lever­ag­ing of the Group’s as­sets, which con­strains the po­ten­tial amount of cash that could be raised from as­set sales. In our reg­u­lar mon­i­tor­ing of CIB, and of Cli­co since 2004 (when in­sur­ance su­per­vi­sion was trans­ferred from the Min­istry of Fi­nance) the Cen­tral Bank has con­sis­tent­ly fo­cused on these de­fi­cien­cies but have been stymied by the in­evitable chal­lenge of change and by in­ad­e­qua­cies in the leg­isla­tive frame­work which do not give the Bank the au­thor­i­ty to de­mand these changes.”

Cli­co re­ceived a bailout of $5 bil­lion com­pris­ing $14.5 mil­lion in eq­ui­ty and $4.99 bil­lion in pref­er­ence shares, pay­ing 4.75 per cent in­ter­est per an­num.

The Cen­tral Bank as­sumed con­trol of Cli­co on Feb­ru­ary 13, 2009, un­der the spe­cial emer­gency pow­ers out­lined in sec­tion 44D of the Cen­tral Bank Act. That con­trol end­ed in De­cem­ber 2022.