Caribbean Cement Company Limited, CCC, will start the planned redemption of preference shares held by its parent Trinidad Cement Limited, TCL, an element in a wider plan that was previously disclosed to restructure the company’s finances.
”The aggregate amount of the consideration to be paid by CCC to TCL is of US$40.5 million,” said Caribbean Cement in a market filing this week. The payment is “below par value” and is to be paid on a yearly basis starting in the current 2018 calendar year, said the Rockfort, Kingston-based cement maker.
Caribbean Cement signed the preference share redemption agreement with TCL on July 6. It will result in the redemption of 52 million preference shares that are held by TCL that were issued by CCC on 2010 and 2013.
The wider deal also terminates an operating lease agreement which originated eight years ago and returns US$118 million of assets to the Jamaica-based operation from ownership from TCL. With the local operations holding the assets, it will reduce finance and lease costs.
Caribbean Cement will repay TCL for its prefs from at least one-third of its annual profits, if any, which would otherwise be available for distribution. This will rise to at least two-thirds of Caribbean Cement’ profits in the event that any preference shares held by TCL remain outstanding after the scheduled partial redemption payment during the 2026 calendar year.
Caribbean Cement’s financials up to March shows $5.07 billion in preference shares and no loans. Subsequent to the March first quarter, the company signed two loan agreements valued at US$102 million in late May for the repurchase of assets on its grounds at Rockfort in Kingston. The loans place Caribbean Cement in the debt of ultimate parent company Cemex, while it unwinds its obligations to Trinidad Cement, which is also owned by Cemex.
The loans will mainly pay for the acquisition of Kiln 5 and Mill 5, as initially laid out in an equipment sale and purchase agreement dated April 27.