Trinidad Cement Limited has overshot by more than US$10m agreed limits on its short term borrowings, but has secured the forgiveness of its creditors in anticipation of the cement maker getting back on track with its financing plan by next month.
The company’s debt plan had called for the issue of a long-term bond valued at US$20m (TT$127m), which TCL said was delayed to secure the approval of lenders.
The terms of the bond are still being worked on, but it will have a life of three to seven years for different tranches, marketed to institutional investors, and be placed largely inside Trinidad, Alan Nobie said, manager of Investor Relations and Corporate Communications for TCL group.
Trinidad Cement’s current level of indebtedness is directly linked to its backing of the US$177m expansion and modernisation project by its 74 per cent-owned Jamaican subsidiary Caribbean Cement Company Limited.
Both companies are struggling with falling sales and huge debts: TCL’s total liabilities now amount to TTD2.4bn; while Carib Cement’s hit JMD5.7bn - a figure contained by the conversion of JMD1.33bn of debt to parent TCL into preference shares.
TCL took on an additional US$105m of debt to cover the Caribbean Cement project as well as upgrades and improvements at its own base at Claxton Bay in Trinidad.
The company’s debt and other financing charges at half-year were 77 per cent of operating profit, which itself was under pressure because of dampened sales in the period.
Sales dropped from TTD930m at half-year 2009 to TTD831m in the current period, sending operating profit plunging 38 per cent from TTD162m to TTD100.8m.
Like its Jamaican subsidiary, TCL remains in a negative cash position, which in its case has close to quadrupled in six months from TTD21m at yearend December 2009 to TTD77m at June 2010.
A TTD8.95m gain on disposal of two concrete manufacturing assets in St Maarten on March 31, did little to ease liquidity pressures, but was a fillip to bottom line profit of TTD47.89m in the half-year period.
This, however, still under performed HY2009, when the cement group reported net profit of TTD66m.