Imbert outlines Clico Investment Fund distribution

Finance Minister Colm Imbert said distribution of shares and bonds to Clico unitholders will begin in January 2023, after the termination of the Clico Investment Fund (CIF) on January 2, 2023.

In the Senate on Tuesday, Imbert gave a breakdown of the status of the fund, which was established by the government in 2012 to redeem the 11-to-20-year series of bonds issued to holders of short-term investment products sold by Colonial Life Insurance Company (Clico) and British American Insurance Company.

“The Clico Trust Corporation, established as a wholly-owned state enterprise, is the trustee of the CIF and is governed by a trust deed. The CIF is a closed end fund comprising of 204 million units which is traded on the TT Stock Exchange. The fund has a life of ten years with a redemption date of January 2, 2023. The CIF consists of a mix of 40,072,299 RBL Financial Holdings Ltd shares and government bonds with a face value of $702,867,000 with a coupon of 4.25 per cent and a term of 25 years.”

He outlined how the distribution would take place as defined under clause 19 of the Clico Investment Trust Deed. Clause 19.2 says after the trust is terminated, the trustee shall distribute the RBL Financial Holdings shares, any other assets comprising the deposited property and the fund income in specie (a Latin term meaning in actual form), to the unitholders.

“The trustee shall be entitled to retain out of any monies in its hands, any part of the deposited property full provision for all costs, debts, liabilities, charges, expenses, etc., in accordance with the termination of the fund. As at September 30, 2022, the CIF had 6,227 unit holders. In accordance with the trust deed, the deposited property, less costs of winding up, is to be distributed in specie, which means in actual form, to the unit holders and will be allocated as follows.

“Unitholders will receive 0.1964 Republic Bank Financial Holdings Ltd shares for each unit held, calculated as 40,072,299 shares divided by 204,000,000 CIF units. Clause 19.2.1 states where the distribution in specie of the shares would result in fractional shares being distributed, the number of shares shall be rounded down to avoid any absurd result. The bonds will be similarly pro-rated and unitholders will be entitled to 3.445 bonds per unit held. Any residual amount due to unitholders resulting from the above distribution will be paid in cash.”

Imbert outlined the timeline over which the property would be distributed and the actions leading up to the termination of the fund.

“The last date for trading of CIF units on the Stock Exchange will be December 30, 2022, and the transfer of shares and bonds will commence from the week of January 2023. Once transfers have been made and expenses paid, CIF will be de-registered from the Stock Exchange and wound up.

“During November 2022, the trustee Clico Trust Corporation will place ads in the newspapers advising of the closure of the fund, letters will be issued to the Stock Exchange and the Securities and Exchange Commission formally advising of the closing of the fund on January 2, 2023, and the lead broker will hold discussions with the brokers of the unitholders in the transfer of shares.”

Imbert was responding to a question by Opposition Senator Wade Mark prior to the adjournment of the Senate. Mark asked for clarification as to how the fund would be terminated and distributed, and what value unitholders would receive.

“There’s a need for government to give an idea to unit holders what they are going to do with the units which we understand amount to 204 million, because the value of these units has fallen the from time issued to $27 per unit, so if you have to convert that into shares, it would be cheaper than when it was originally purchased at $31 per unit. I looked at the share price of Republic Bank Ltd and I saw about three or four weeks ago it was at $140 a share, and a couple days ago it was at $133 so there is some uncertainty from the market so the government needs to clear the air.”

Imbert said Mark’s information was wrong, as the units were given a face value of $25 when the fund was first established, not $27 or $31.

“The value at which the CIF units trading most recently is $28.54, so the units are now worth more than when they were first issued under the CIF declaration of trust on October 31, 2012, which is when Senator Mark was associated with a former government. There have been a series of distributions since then, dividend payments on the CIF units from 2012 to now, so I don’t think it’s fair to even insinuate that CIF holders have lost out over the period.”