In last week’s com­men­tary in this space, which was head­lined, “Should Govt sell its TSTT shares now?” the pub­lic was re­mind­ed of an an­nounce­ment made by in­com­ing prime min­is­ter Stu­art Young that the Cab­i­net, in March 2022, took a de­ci­sion to es­tab­lish a sub-com­mit­tee that was man­dat­ed to look at TSTT’s cur­rent po­si­tion, whether the ma­jor­i­ty state-owned telecom­mu­ni­ca­tions provider was fit for pur­pose in the ever-chang­ing telecom­mu­ni­ca­tions in­dus­try and to make rec­om­men­da­tions on what should be done with TSTT.

One as­pect of the rec­om­men­da­tions, Mr Young said, “would, of course, in­clude a cur­rent val­u­a­tion of the com­pa­ny.”

The set­ting up of the sub-com­mit­tee came in the mid­dle of TSTT’s roll­out of a re­struc­tur­ing ex­er­cise by the com­pa­ny, which in­clud­ed re­trench­ment pro­gramme that even­tu­al­ly re­sult­ed in over 460 em­ploy­ees of the com­pa­ny be­ing re­trenched.

At the end of its 2022 fi­nan­cial year, which was on March 31, 2022, TSTT de­clared an af­ter-tax loss of US$36 mil­lion (TT$243 mil­lion). That 2022 loss was the fifth in a row for the com­pa­ny with its loss­es for the five-year pe­ri­od to­talling US$261 mil­lion (TT$1.77 bil­lion).

It is note­wor­thy, I be­lieve, that Cab­i­net de­cid­ed to ap­point the five-mem­ber TSTT sub-com­mit­tee at a time when the com­pa­ny was un­der­go­ing a painful re­struc­tur­ing ex­er­cise, which re­sult­ed in an­oth­er year of loss­es. The con­text of the sub-com­mit­tee’s ap­point­ment is cru­cial be­cause of the re­quire­ment for a cur­rent val­u­a­tion of TSTT and Mr Young’s com­ment, in re­sponse to a ques­tion about the in­volve­ment of the rep­re­sen­ta­tive trade union, that “I don’t get the im­pres­sion that we are go­ing to be do­ing a very deep dive.”

Some­one in Cab­i­net may have thought that propos­ing to sell TSTT when it was strug­gling to sur­vive—in­deed, when it was in dan­ger of go­ing bank­rupt, fol­low­ing its au­di­tor not­ing there was “ma­te­r­i­al un­cer­tain­ty re­lat­ing to go­ing con­cern’ in its 2020 and 2021 fi­nan­cial years—was ap­pro­pri­ate.

I do not share the view that state as­sets should be di­vest­ed when T&T, or the com­pa­ny be­ing sold, is fac­ing ex­treme fi­nan­cial stress. That was part­ly the case of the Iron and Steel Com­pa­ny of Trinidad and To­ba­go (IS­COTT), which was com­mis­sioned in 1980, re­port­ed cu­mu­la­tive loss­es of hun­dreds of mil­lions of US dol­lars for nine years, was leased to the Lak­sh­mi Mit­tal’s IS­PAT group in 1989 and then sold to Mit­tal for pal­try US$70 mil­lion in 1994.

If it has a choice, it is much bet­ter, in my view, for the state to em­bark on a struc­tured pro­gramme of pri­vati­sa­tion or di­vest­ment BE­FORE the coun­try faces a fi­nan­cial cri­sis, at which point the Gov­ern­ment is forced to sell as­sets for much less than their true val­ue.

Min­is­ter of Fi­nance, Colm Im­bert, ap­peared to demon­strate an ap­pre­ci­a­tion of the wis­dom of the need for ap­pro­pri­ate tim­ing of the sale of state as­sets, when he said, in de­liv­er­ing the 2025 bud­get on Sep­tem­ber 30, 2024, that the Gov­ern­ment in­tends to em­bark on a num­ber of spe­cial projects.

“These projects in­clude projects to GEN­ER­ATE MUCH NEED­ED REV­ENUE (em­pha­sis added) and cre­ate new jobs, to di­vest state as­sets that are bet­ter man­aged by the pri­vate sec­tor, to en­cour­age di­rect for­eign in­vest­ment, and lo­cal in­vest­ment, es­pe­cial­ly in the tourism sec­tor,” said Mr Im­bert.

The five spe­cial projects Mr Im­bert out­lined were:

* The sale or lease of the Mag­dale­na Ho­tel in To­ba­go;

* The es­tab­lish­ment of a new five-star in­ter­na­tion­al­ly brand­ed re­sort ho­tel on the Gov­ern­ment-owned Buc­coo Es­tate in To­ba­go, which is “ex­pect­ed to be on the scale of the pre­vi­ous­ly pro­posed San­dals Ho­tel and if suc­cess­ful, will bring tremen­dous eco­nom­ic ben­e­fits to the peo­ple of To­ba­go.”

* A re­quest for pro­pos­als to de­vel­op a yacht­ing ma­ri­na in Low­lands in To­ba­go, just south­west of the Pe­tit Trou La­goon, on lands cur­rent­ly be­ing ac­quired by the Gov­ern­ment from the Plan­ta­tions Es­tate. This will be a pri­vate-pub­lic part­ner­ship and will in­volve fea­tures in­clud­ing a dock­ing fa­cil­i­ties for at least 50 plea­sure craft, both pow­er and sail, up to 18 me­tres in length and stor­age fa­cil­i­ties on land for a fur­ther 50 plea­sure craft;

* The sale of the Gov­ern­ment’s 49 per cent share­hold­ing in the Colo­nial Life In­sur­ance Com­pa­ny (Cli­co), which “is no longer con­sid­ered to be of strate­gic im­por­tance to the Gov­ern­ment and its di­vest­ment will earn sev­er­al bil­lion dol­lars;” and

* The sale or lease of the Pointe-a-Pierre re­fin­ery.

Un­for­tu­nate­ly, the Gov­ern­ment has pro­vid­ed ad­di­tion­al in­for­ma­tion on on­ly one of the five spe­cial projects out­lined by Mr Im­bert last Sep­tem­ber. That is the de­ci­sion by the Gov­ern­ment to en­ter in­to ne­go­ti­a­tions with the Niger­ian en­er­gy com­pa­ny, Oan­do, for the lease of the re­fin­ery.

Giv­en the fact that the Gov­ern­ment needs to GEN­ER­ATE MUCH NEED­ED REV­ENUE, one would have ex­pect­ed Mr Im­bert to have pub­li­cised the progress that has been made on the oth­er four “spe­cial projects,” es­pe­cial­ly the sale of the state’s 49 per cent share­hold­ing in Cli­co.

One per­ti­nent ques­tion here is whether on­ly the state’s 49 per cent share­hold­ing in Cli­co is up for sale or would the sale in­clude the 51 per cent of the in­sur­ance com­pa­ny that is un­der the con­trol of the joint liq­uida­tors of CL Fi­nan­cial, who were ap­point­ed as a re­sult of an ap­pli­ca­tion to the High Court by Mr Im­bert in 2017?

It seems ev­i­dent that what should be on the ta­ble is the sale of 100 per cent of Cli­co.

Oth­er low-hang­ing fruit

TTMB

On March 20, 2024, the Trinidad and To­ba­go Mort­gage Bank (TTMB) was es­tab­lished as a re­sult of a strate­gic merg­er be­tween Trinidad and To­ba­go Mort­gage Fi­nance Com­pa­ny (TTMF) and the Home Mort­gage Bank (HMB).

The board of di­rec­tors of the two in­sti­tu­tions de­cid­ed to merge the two com­pa­nies on Au­gust 6, 2021, “cre­at­ing a pow­er­house in re­al es­tate fi­nanc­ing and in­vest­ment so­lu­tions,” ac­cord­ing to the TTMB web­site.

In the 2022 bud­get, which was de­liv­ered on Oc­to­ber 4, 2021, Mr Im­bert said: “...We have agreed to the merg­er of the Trinidad and To­ba­go Mort­gage Fi­nance Com­pa­ny and the Home Mort­gage Bank, cre­at­ing in the process the Trinidad and To­ba­go Mort­gage Bank. We in­tend to make an Ini­tial Pub­lic Of­fer (IPO) of the Gov­ern­ment shares in the new en­ti­ty to fur­ther en­cour­age pub­lic par­tic­i­pa­tion in the cap­i­tal mar­ket. Bar­ring un­fore­seen cir­cum­stances, the align­ment of the op­er­a­tions of both en­ti­ties is ex­pect­ed to be com­plet­ed in the first half of fis­cal 2022.”

Ques­tion: What has be­come of the Gov­ern­ment’s in­ten­tion to hold an IPO of the Gov­ern­ment’s shares in TTMB?

CAL

About a month ago, Mr Im­bert, told a Caribbean Air­lines Ltd (CAL) cus­tomer ap­pre­ci­a­tion event at Queen’s Hall, that ma­jor­i­ty state-owned Caribbean Air­lines Ltd (CAL) re­port­ed an op­er­at­ing prof­it of US$12.1 mil­lion in 2024, which fol­lowed an op­er­at­ing prof­it of US$24.7 mil­lion in 2023 and an op­er­at­ing loss of US$36.7 mil­lion in 2022.

Ques­tions: If CAL has found the recipe to gen­er­ate op­er­at­ing prof­its—which ex­cludes the air­line’s debt ser­vice pay­ments—is there a strate­gic re­gion why the Gov­ern­ment is hold­ing on to its 88.06 per cent stake in the com­pa­ny?

Would it not be bet­ter to start a process of look­ing for a buy­er for CAL, which would not on­ly raise rev­enue for T&T, but al­so re­duce some of the air­line’s US-dol­lar debts?

First Cit­i­zens

The ma­jor­i­ty state-owned, pub­licly list­ed com­mer­cial bank First Cit­i­zens Group Fi­nan­cial Hold­ings Ltd record­ed a prof­it af­ter tax of $957 mil­lion for the year end­ed Sep­tem­ber 30, 202412. This rep­re­sents an in­crease of 23.17 per cent from $777 mil­lion in its 2023 fi­nan­cial year. The group’s to­tal as­sets as of June 30, 2024, amount­ed to $46.4 bil­lion, which was four per cent high­er than the same pe­ri­od in 2023.

Ques­tion: Shouldn’t the Gov­ern­ment’s shares in the First Cit­i­zens Group al­so be of­fered for sale?