About one-month ago, on December 27, 2023, I wrote a news story in the T&T Guardian, which was headlined Govt to sell MHIL shares to Proman, in which it was reported that a decision had been taken to sell Clico’s 56.53 per cent shareholding in a company called Methanol Holdings International Ltd to petrochemical giant, Proman, for the sum of US$347 million.
MHIL was incorporated in July 2004 in St Kitts and Nevis with its registered office being the law offices of Gonsalves & Hamel-Smith. MHIL has owned 60 per cent of the Oman Methanol Company since August 12, 2008, according to Clico’s 2022 financial statement.
The other shareholder in MHIL, with 43.47 per cent, was Consolidated Energy Ltd, a company that is owned, either in whole or in part, by Proman.
The subtext of the December 27 article is that if MHIL owns 60 per cent of the Oman Methanol Company, and Proman owns 100 per cent of MHIL, then Proman would be the majority shareholder in MHIL with 60 per cent.
Two things happened this week that have progressed that story, which was illustrated with a photograph of Prime Minister Dr Keith Rowley shaking hands with Proman CEO David Cassidy at the start of a visit to the Switzerland headquarters of the company in September 2022.
The first is that Dr Rowley had some kind very words to say about Proman on the first day of this week’s 2024 Trinidad and Tobago Energy Conference.
Responding to a question from T&T Energy Chamber CEO, Dax Driver, who mentioned Proman’s role in driving revenue, jobs and entrepreneurship in T&T, Dr Rowley said:
“We are particularly pleased with the successes that Proman has made. And, in the Government itself, we have been taking steps to ensure that our people are astride of the developments,” said the Prime Minister, as he went on to talk about the 35 graduates of “some of the best universities in the world” who were brought into the Ministry of Energy in 2018.
“Proman’s agreement to do more in Trinidad and Tobago: to create, to innovate, to establish and to pioneer in going after projects like small-pool gas, which De Novo Energy (a Proman subsidiary) has done; taking decisions to have new-build ships using methanol in their fleet and showing the world that ships can, in fact, change. And, of course, taking steps to take us to a point where the world-trading decision makers would know that their vessels can be refueled in Trinidad and Tobago with clean fuel (methanol), especially as we move towards the greening of the products at the Point Lisas Industrial Estate.
“These are the decisions that will give us access, not only to markets, but to better markets. And the collaboration that we heard about this morning, can go all the way down, but usually starts with the understanding that we are all in this thing together.”
After the question and session with Dr Driver, T&T’s Prime Minister stopped by the Proman booth, which was located in the hallway outside the Hyatt conference centre, and chatted with some of the company’s people, including former Central Bank Governor Dr Euric Bobb and former government senator and minister, Carlos John.
Questions:
• What is the nature of Proman’s “agreement to do more in Trinidad and Tobago,” and is this agreement a formal document that can be made public or is it a verbal commitment by the Swiss company to use its best efforts to do more in T&T in the future?;
• At the renaming ceremony for a Proman methanol-fueled ship at the Hyatt on November 23, 2022, Prime Minister Rowley spoke about the creation of a bunkering industry in T&T for ships that use methanol.
What steps has the Government taken to progress the aspiration to make T&T a centre of methanol fuel bunkering?
Selling MHIL shares
The second interesting development is that Minister of Finance, Colm Imbert, (who is Corporation Sole) confirmed the December 27, 2023 Guardian article that Clico’s block of 56.53 per cent of MHIL was sold to Proman.
In a motion on the adjournment of Tuesday’s sitting of the Senate, Mr Imbert clarified that the decision to sell the block of shares to Proman was taken by the shareholders of the insurance company: the liquidators of CL Financial, which is the parent company of Clico, owning about 51 per cent of the company, and the Government, the owner of 49 per cent of the insurer.
“The liquidator could have sold them (the MHIL shares) without the Government’s consent, but there is a relationship of respect between the liquidator and the Government with respect to important decisions.
“It is the business of the liquidator to try and recover the $30 billion that the Government has put into the bailout of CL Financial...It is the job of the liquidator to liquidate the assets if CL Financial, which include the 51 per cent of Clico to repay that $30 billion the Government is owed...”
Mr Imbert went on to refer to a clause in the agreement that established MHIL, which stipulated that if either Clico or Consolidated Energy were selling their shares in MHIL, those shares had to be offered to the other party.
“It is a typical commercial clause where if the shares are to be sold, they have to be first offered to the other shareholders and if that shareholder refuses, then the shares can be sold on the open market...
“On all previous occasions when Clico offered the shares to Consolidated Energy, at an independent valuation price...in accordance with the shareholders’ agreement, Consolidated Energy declined to pay the price. So whether it was US$300 or US$350 million...Consolidated Energy said no we cannot pay that price.”
Mr Imbert said after the shares were offered for sale “a month has to elapse, and then Consolidated Energy would say yes we are buying the shares at the valuation price or no we are not. On every occasion, they said no.”
He said there was another “unique” element of the shareholders’ agreement that kicked in, which was that the MHIL shares could not be sold to a competitor of MHIL (presumably a methanol company).
The Minister of Finance confirmed that there were three attempts by Clico to offer the shares to Consolidated Energy.
“On the last occasion after multiple legal opinions were received, an opinion was rendered that you could try to sell them to the Government and the NIF (the National Investment Fund). As soon as that was done, the lawyers for Consolidated Energy immediately sent pre-action protocol letters to the Government outlining that if it tried to complete the transaction, they would go to court and ask for an injunctive relief...
“Sometime between September and November last year, Consolidated Energy said we are now ready to buy the shares at the valuation price, which is what they had refused to do for 12 years.
“As a result, the shareholders’ agreement kicked in and they have paid $2.4 billion (US$347 million) for the shares. That’s it.”
Questions:
• If Consolidated Energy refused Clico’s offer at the end of 2022, on what legal basis can they come nine to 11 months later and say they are now ready to buy the shares?
• If the Government received “multiple” legal opinions that Clico could sell the MHIL shares to Corporation Sole and NIF, why didn’t Mr Imbert instruct his attorneys to fight the matter, instead acquiescing to Proman’s injunction threat?
• Why would the Government’s proposal that Clico sell the shares to Corporation Sole and NIF trigger a pre-action protocol letter, if neither is a competitor of MHIL?