Lease buy out to save Carib Cement $2B

Caribbean Cement could save J$2B from lease buyout.

Caribbean Cement (CCC) seems set cut leasing cost by around $2 billion per annum when the company reacquires the leased equipment from Trinidad Cement (TCL) later this year.
The company paid $3.3 billion in 2017 for the lease of the new kiln that was installed to facilitate expansion of the plant.
Caribbean Cement announced that it signed a memorandum of understanding with agreeing to the termination of the operating lease and the purchase by CCC of the assets covered under the Lease.
Agreement is for approximately USD$118 million to be paid to TCL and redemption of an aggregate number of 52 million preference shares held by TCL for approximately USD$40.5 million to be paid over a nine-year period starting in 2018 and sourced from at least one third of CCC’s profits available for distribution from the previous year. CCC will also seek financing to fund the Asset Acquisition and the Redemption.

Carib Cement kilns

The agreement flows from concerns of minority shareholders who at the company’s last AGM, at which Shareholders were given the commitment by management that the best structure would be identified to acquire ownership of the assets. A special advisory group including representation from CCC’s minority Shareholders was subsequently set in place for that purpose.”
The closing of the above transactions is subject to the satisfaction of certain conditions, including
approval from TCL and CCC’s corporate bodies, securing financing options by CCC, the absence of occurrence or potential occurrence of any material tax and/or accounting effects if the above transactions are executed, among others. The definitive agreements in relation to the foregoing
transactions are expected to be executed by TCL and CCC within 90 days from the date of signing of the MOU.
IC gathers that CCC has already lined up potential financing at attractive rates for the execution of the asset acquisition.

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