Compass Lexecon’s Expert Dr. Manuel Abdala Assists ICC Tribunal in Setting Transaction Price for MHTL’s Shares in a Shareholder Dispute Involving Oppression

Compass Lexecon was retained by the Barbados-based Consolidated Energy Limited (CEL) to provide expert testimony in its shareholder dispute against its former partners, CLICO and CL Financial (CLF), regarding the value and control of MHTL, one of the largest worldwide methanol and UAN companies based in Trinidad and Tobago.

The shareholder dispute has its origin in early 2009 when, as a result of the financial crisis, CLICO and CLF were rescued by the Government of Trinidad and Tobago, taking control of their combined 56.53% shares in MHTL as part of a bailout process. CEL has since claimed that its partners had failed to respect its rights of first refusal and that the Government’s presence in MHTL’s board had negatively affected MHTL’s performance. In a March 2013 ruling, an International Chamber of Commerce (ICC) Tribunal found that CLICO and CLF engaged in a conduct qualified as oppression, by unfairly disregarding CEL’s reasonable expectation that MHTL would remain a company privately owned for commercial profit. In a subsequent November 2013 decision, the Tribunal ruled that the remedy to end oppression was for Respondents to negotiate and complete the terms of a transfer of their 56.53% stake in MHTL to CEL, by no later than January 2014.  In this ruling, the Tribunal followed Dr. Abdala’s recommendation that the valuation of the shares ought to be based under the criteria of Fair Market Value, including a discount for illiquidity due to, among other factors, the restrictive exit conditions of the Shareholders Agreement. Because the parties failed to agree on a transaction price by January 2014, a final hearing was held in May 2014 to help the Tribunal rule on the fair market value of MHTL’s 56.53% equity stake.

Respondent’s CLICO and CLF presented witness and expert evidence from three valuation teams, Deloitte (London), Duff & Phelps Corporation (New York) and UBS (New York). Their opinion included three valuation methods: DCF, relative multiples and replacement cost value, finding MHTL’s 56.53% value to range between US$ 1.6 to US$ 2.2 billion. The Tribunal endorsed Dr. Abdala’s view that the DCF was the only method that could be relied, for this case, to assess fair market value, and set the transaction price at US$ 1.175 billion. In October 9, 2014 CEL acquired the 56.53% stake at the price set by the Tribunal, becoming the sole owner of MHTL and effectively putting an end to the oppression claim.

Compass Lexecon’s expert Manuel A. Abdala led this engagement supported by Sebastian Zuccon, Daniela Bambaci, Alan Rozenberg, Maria Agustina Gallo and Carlo Tanghetti. Professor Pablo T. Spiller acted as co-expert with Dr. Abdala in the early phase of the dispute. The team worked with Jeff Chambers, Eileen O’ Neill, Tim Lankau, Michelle Meriam and Don Jackson of Ware, Jackson, Lee & Chambers LLP, counsel for CEL.