PROMAN Holding (Barbados) Ltd has been given until January 9 to provide information sought by CL Financial (CLF) relating to the sale of Clico Energy to the energy company, ahead of an appeal of a judge’s reversal of the sale later that month.
On Monday, CLF and the conglomerate’s insurance arm, Clico complained that the court’s order on October 19 was not being complied with.
Senior Counsel Deborah Peake said her client, CLF, was concerned by communication it had received which suggested certain disclosures could be in breach of the Companies Act.
She said CLF had to file the application for compliance with the court’s orders, as some information has been provided, but no date was given for the provision of the remainder.
Hearing of Proman’s substantive appeal comes up on January 27, with a second date reserved if necessary.
Proman’s attorney, Simon Salzedo, KC, said his client’s concern was the confidentiality of information. He said CLF had asked for “a great deal of information” and its response was to share what ity could – some 4,000 pages.
“We are working on it.”
However, he said the default position was that directors were not entitled to pass information on to third parties, and while those directors appointed by the CLF receiver can, Proman was simply asking to be able to identify those documents which contained commercially sensitive information and not pass them on. This, he said, can then be resolved by the court.
“But we are not resisting (the order).
“They want us to provide all the information in seven days. We cannot agree that all information be provided. Some may not be in my client’s control and we cannot give a final date,” he said in submissions. “We have been responding in good faith. There is no need for a draconian order.”
Proman was also accused of “deliberately attempting to slow CLF and Clico down and hide information. The accusation was made by Clico’s attorney, Fyard Hosein, SC, to which Salzedo took strong objection.
“I ask the court to disregard that. We have accepted the orders of the court and we have complied, providing information as practically possible…What will cause problems is a blanket demand,” Salzedo said.
In the end, the Appeal Court ordered the disclosure of information.
In October, Justices of Appeal Alice Yorke-Soo Hon, Gregory Smith and Vasheist Kokaram granted an interim stay of Justice Devindra Rampersad’s reversal of the CLF sale of Clico Energy to Proman.
The sale took place three days after the government bailed out the cash-strapped financial giant in early 2009.
The judges also granted an interim stay until the hearing of Proman’s appeal. It was granted with conditions.
A primary condition was that Proman pay into court US$83 million by October 31, and appoints directors nominated by CLF and Clico.
In delivering the decision, the judges said they were concerned about the risks to CLF and Clico’s being able to enforce the High Court’s judgment, in light of assertions by Proman that its backers cannot and will not make the payout.
On October 2 last year, Justice Devindra Rampersad ordered Proman Holding to return CLF and Clico’s 51 per cent stake in Process Energy (Trinidad) Ltd (PETL), which operated as Clico Energy Company Ltd before Proman bought out both companies’ shares for approximately US$46 million.
Proman Holdings was also ordered to pay CLF the dividends it had collected from the shares since 2009, plus interest.
As part of the Appeal Court’s ruling on the stay, Proman has to continue to hold those dividends and any it is likely to pay out in the future. It also has to provide the two directors with information on profits.
As part of Rampersad’s ruling, CLF, which is currently in liquidation, was ordered to reimburse Proman Holding the purchase price of US$46.5 million, plus interest.
In voiding the sale, Rampersad ruled the company was grossly undervalued. In ordering Proman to pay CLF the dividends it collected from shares, CLF, in turn, was ordered to reimburse Proman Holding for the purchase price, plus interest.
In his written 87-page decision, the judge held that former CLF executive chairman Lawrence Duprey acted oppressively and unfairly, prejudicial to both companies’ interests, when he cut the deal.
The deal between CLF, its subsidiary Clico and Proman over the sale of its 51 per cent stake in Clico Energy was struck three days after the memorandum of understanding was signed to assist with liquidity issues within the group.
At the time, CLF controlled 34 per cent and Clico another 17 per cent, and Proman controlled the remainder. The deal resulted in Proman controlling the entire company, which held a sizeable portion of the group’s stake in Methanol Holdings Trinidad Ltd (MHTL) and other minor stakes in profitable energy companies.
The main ground of contention in the lawsuit was over the US$46.5 million Proman paid for the shares. In 2014, the International Court of Arbitration ordered Clico to sell its remaining shares in MHTL to Proman’s subsidiary Consolidated Energy Ltd (CEL) for US$1.175 billion (TT$7.485 billion).
In its substantive complaint, CLF and Clico have argued that Duprey did not have the authority to sell Clico’s 17 per cent stake in Clico Energy, which they claimed CLF held in trust for Clico.
The companies also challenged the sale price of the shareholding, which was valued at approximately US$130 million in 2012. They also claimed the deal was in breach of the MoU signed by CLF and the government to facilitate the multi-billion-dollar bailout, as Duprey did not seek board approval.
Proman appealed the decision and applied for a stay of the judgment pending the outcome.
The CLF conglomerate was put into liquidation in 2017 to clear its remaining debt arising from the multi-billion-dollar bailout by the government in 2009.
Last week, it was announced that Clico, the insurance arm of CLF, was being relieved of the Central Bank’s emergency control after more than a decade.