Finance Minister Winston Dookeran presented the bill, saying government plans to retire the remaining indebtedness of CLICO policyholders through bonds. He noted that Republic Bank's shares have grown from in value from $74 to $90 in the past year.
Dookeran aded that the RBL shares will be held in a trust called NEL (National Enterprises Ltd) 2.
NEL is a holding company listed on the local stock exchange in which the State's interests in telecoms provider TSTT, National Flour Mills and energy company Tringen are held.
Dookeran told the House of Representatives, "Investors who continue to receive annual 20-year bonds, the facilities for discounting their bonds of maturity up to ten years will remain unchanged.
"It is expected that the discounting rate would be in the order of 80 cents (on every dollar) resulting in a haircut for the first ten years of 20 per cent.
"Bonds with a maturity of 11 to 20 years may be exchanged for units in NEL 2 at a rate of dollar for dollar, which means that the total return for the investor would comprise 80 cents (on the dollar) on bonds with maturity from one to ten years and 100 cents on the dollar for the longer term bonds through the NEL 2 mechanism.
"On this basis the average return would be in the order of 92 cents on the dollar, a significant increase over the 67 cents on the dollar implied by the original plan," Dookeran said.
"Holders of traditional policies would end up receiving 100 cents on the dollar," he added, noting that their policies would be fully honoured.
He said there are over 200,000 people who have policies of one type or the other with CLICO.
He said holders of short-term investments and mutual fund investors with less than $75,000 have received 100 cents on the dollar.
Dookeran said the same applies to trade unions and credit unions through the $788 million liquidity window managed by the Central Bank.
"Holders of short term investments and mutual funds in values in excess of $75,000 will receive, subject to the valuation of the NEL shares and the mean curve in the financial sector, an average of near to 92 cents on the dollar. There is a possible upside if they hold on to the NEL shares," Dookeran said.
He said the RBL shares would have real market value. He also addressed the issue of legal challenges and a possible liquidation of CLICO, noting that such a move would not be in the national interest.
"Holders of traditional policies would end up receiving 100 cents on the dollar," he added, noting that their policies would be fully honoured.
He said there are over 200,000 people who have policies of one type or the other with CLICO.
He said holders of short-term investments and mutual fund investors with less than $75,000 have received 100 cents on the dollar.
Dookeran said the same applies to trade unions and credit unions through the $788 million liquidity window managed by the Central Bank.
"Holders of short term investments and mutual funds in values in excess of $75,000 will receive, subject to the valuation of the NEL shares and the mean curve in the financial sector, an average of near to 92 cents on the dollar. There is a possible upside if they hold on to the NEL shares," Dookeran said.
He said the RBL shares would have real market value. He also addressed the issue of legal challenges and a possible liquidation of CLICO, noting that such a move would not be in the national interest.
"This revised offer far exceeds any recovery that would be obtained for the winding up or the liquidation of CLICO. In the winding up investors may have to wait years before they can receive their payment.," he said.
"And the estimated recovery may change significantly as values received from assets may be firesale values." Dookeran added.
Dookeran called the the PNM's guarantee of payment an "empty, hollow guarantee" because there is no money to back it. He said the PNM put in $5 billion, not the $12 billion required.
He said in June 2010 only $2.5 billion of the $5 billion remained, the initial $2.5 billion having been used to satisfy growing interest rates which paid to depositors.
"That guarantee had absolutely no chance of being honoured," he said. "We have provided a full commitment backed by funds...(and) the necessary resources to make it happen."
He said to date Government had paid 9,815 depositors with investments of less than $75,000 about $301 million and had paid through the compassionate window some $94 million to 455 cases for urgent relief.
He said in June 2010 only $2.5 billion of the $5 billion remained, the initial $2.5 billion having been used to satisfy growing interest rates which paid to depositors.
"That guarantee had absolutely no chance of being honoured," he said. "We have provided a full commitment backed by funds...(and) the necessary resources to make it happen."
He said to date Government had paid 9,815 depositors with investments of less than $75,000 about $301 million and had paid through the compassionate window some $94 million to 455 cases for urgent relief.
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