Sale of CL Financial malls progressing, joint liquidators tell court

THE sale of Trincity Mall and its commercial centre, Trincity Commercial Centre Ltd, (TTCL), is progressing.

And when that process is completed, joint liquidators are expected to approach the court for permission to begin a similar process for the sale of Long Circular Mall.

The properties are the jewels of Home Construction Ltd (HCL), a subsidiary of CL Financial (CLF), which is under liquidation which is being managed by joint liquidators David Holukoff and Hugh Dickson of the firm Grant Thorton.

In 2020, the liquidators indicated their intention to prepare the properties for divestment. In its twelfth to the court, for the period March 30, 2023 to October 20, 2023, Holukoff provided an update on their progress of CLF’s key assets under their purview as well as provide an update on the various legal matters arising from the Government’s bail out of the conglomerate in early 2009 which led to it being placed into liquidation and under the control of the Central Bank.

Justice Kevin Ramcharan is presiding over the winding up of CLF.

In the report, Holukoff said during the reporting period, the joint liquidators continued to oversee the execution and/or completion of sale agreements for assets directly and indirectly owned by CLF with a total combined value of approximately $314.6 million.

The report said in addition to that, approximately $313.2 million in cash has been recovered into the CLF liquidation estate during the period.

On the sale of Trincity Mall, the report said the liquidators received four offers for the sale in TCCL; two for the shares and two for the mall’s property assets.

The CLF Group had earlier sold HCL’s Valpark and Atlantic Plaza malls to generate cash flow for the conglomerate.

The report said none of the offers received were equal or higher than the approved minimum sale value set by the court in November 2011, which gave the liquidators the permission to sell TCCL shares or the mall.

The report said the liquidators analysed the binding offers and “ultimately selected a preferred bidder which HCL’s board approved on May 12, 2023.”

“Further negotiations with this selected bidder regarding sale term particulars are currently underway and are due to be agreed shortly

“Due to the offers received being lower than the minimum sale value approved by the court, it is anticipated that the joint liquidators will need to apply to the court for approval to complete the sale. “Preliminary preparations for this have been completed and a formal application will be made once a sale agreement has been finalised. “

It also said the liquidators continue to monitor and progress the sale process.

The report noted that when the sale process for Trincity Mall concludes, the liquidators’ intention is to “seek sanction for and progress” the sale of Long Circular Mall or its commercial centre, Plaza Development Ltd, also in 2023.

Preparatory work has started, the report said. These included the commissioning of an independent third-party valuation for Long Circular Mall, and issuing requests for proposals in respect of that valuation, the agency for the sale of the mall and transaction attorneys to advise on the sale.

Holukoff also said advanced preparations continue for an anticipated application to divest Eastern Commercial Lands Ltd, which trades the Tru Valu supermarket chain.

“ In the period, management, in conjunction with the joint liquidators, has been reviewing the operations of the company with a view to preparing it for sale.

“...A request for proposals was issued to potential brokers for the sale of the Tru Valu operation,

and management has made a recommendation after assessing the responses received. The board of HCL will consider this at its next scheduled meeting.”

On One Woodbrook Place, the high-rise apartment and commercial complex in Woodbrook, the report reminded of previous disputes with residents over increased charges and said parties came to agreement on the collection of increased charges so a court-imposed injunction could be lifted.

The report said a new sales plan for the sale of residential units has been finalised. As it relates to two three-bedroom apartments and two penthouses, three have been sold and these sale prices are being used to update the asking prices for the remaining 39 apartments.

The liquidators are also looking at strategies for the sale of vacant and occupied units either “en bloc, individually or as a completed development.”

“This work remains ongoing.”

Although the Central Bank terminated control of CLF’s insurance arm, Clico, in December 2022, ad with the company reverting back to the shareholders, the liquidators have been working with the new board and chairman and the process to sell the company’s majority interest in Clico will begin.

The report further noted that the liquidators continued to work with subsidiaries across the CLF Group to identify recoveries of cash available and all surplus funds have been distributed to CLF.

The report also said the sale of Colfire was “a careful and structured process.”

“At the time of closing the liquidation estate received $286.6 million from the sale with a further $15million held in escrow whilst awaiting various representations to conclude.

“During the period, the representations provided by CLF concluded satisfactorily and the $15 million, less agent’s costs, was released to the joint liquidators in May 2023. The formal processes of the sale have now concluded.”

Under the sub-heading Dividends, the report spoke of the issue with CL World Brands (CLWB), the beverage arm of CLF.

In June, Ramcharan settled the issue relating to the trust deeds held by CLF for Clico. He ruled that Clico was entitled to a portion of CLWB that held a 44.97 per cent stake in Angostura Holdings Ltd, worth $2.13 billion.

The report said with the court’s ruling that the trust deeds were valid, and CLF holds 42,779,350 shares in CLWB on trust for Clico, the liquidators have not appealed the court’s decision and were making arrangements to have Clico listed on CLWB’s register of members and arrange for payments of various dividends that were safeguarded since their appointment.

On the remaining trust deeds, the report said the liquidators continued to work with parties and its legal advisers to approach the court for similar directions. “These investigations remain challenging, lengthy and extensive due to the significant complexity of the underlying transactions and the vast, historic and widely dispersed nature of supporting documents.”

There is only one trust to be reviewed by them.

The report provided an update on the Clico Energy litigation. In July, the Appeal Court upheld a judge's ruling invalidating the sale of insurance giant Clico’s energy assets to Proman Holdings (Barbados), and also made a finding of fraud in relation to the transaction.

Proman Holdings (Barbados) Ltd and Process Energy (Trinidad) Ltd (PETL), formerly Clico Energy, have since appealed to the Privy Council. In June, CLF’s jefe Lawrence Duprey was ordered to pay US$139,416,295 in damages.

Other legal proceedings involving the conglomerate were also discussed in the report, including appeals relating to the liquidation of Clico Investment Bank (CIB) on its Belverdere shares and one in relation to a jazz festival. Also discussed was an acceptance of an offer of US$110,826,664 by Clico (Bahamas) Ltd.

Of CLF’s land bank, the liquidators have been permitted to divest in excess of 3,000 acres of land under an open-market sale process. In January, the liquidators received 18 bids across 18 plots of land, but a number of them were below the valuation amount. Two bids were accepted for two properties and two were acquired by the Government.

Another key asset of the conglomerate, a four-story commercial building, is expected to be sold in the last quarter of this year.

In terms of cash in hand, the liquidators say the balance on the company’s three bank accounts was $772.6 million at June.

Under “liabilities,” the report said the liquidators have made substantial progress in reviewing numerous creditor claims. So far, they have rejected claims totalling $5.8 billion and admitted some $4 billion in claims.

They have sought legal advice on claims totalling in excess of $9 billion in addition to seeking further information from the creditors.

“It is anticipated that the adjudication of those claims will be completed by December 2023, subject to any appeals of the adjudications,” or into 2024, the report said.

Under operational oversight, the report said while the direct effects of the pandemic have subsided, the Trinidadian economy remained vulnerable to current global economic patterns, leading to high inflation and increased costs.

“As a result, subsidiary companies are experiencing rising costs and revenue challenges. Consequently, there is a continued focus on monitoring cashflows and managing expenses.”

The report said despite cost increases and pandemic-related revenue challenges, HCL has successfully avoided implementing structured layoffs.

“Other operational matters that continue to be addressed include monitoring of stock management and purchasing within the Tru Valu supermarkets, developing, and growing a customer loyalty program to boost sales, dealing with trade union negotiations and staffing needs.”

It also said the liquidators are working with HCL’s tenants on payment plans and rent arrears leading to the “ average accounts receivable balance across the malls” being reduced.

:Importantly, given the intention to sell the malls and preserving and maximising value, the implemented strategy resulted in tenancy rates not materially dropping despite the difficult conditions experienced by the retail tenants.”

There are in excess of 140 subsidiaries in the CLF Group.

The report also provided an account of the liquidators’ fees. It said from January 1, 2023 to June 30, 2023, the they incurred time costs of US$1,391,288.54 (after a discount of US$902,920.84) and disbursements of US$59,180.43

“From date of appointment to June 30, 2023, the joint liquidators incurred time costs of US$15,999,507.06 (after a discount of US$7,536,747.44) and disbursements of US$718,789.07.” the report said.

The report also gave an overview of the matters the liquidators will focus on for the next six months.