Impact of Bond Delinquencies on Jamaica’s NCB Financial Group

A formal ballot request was reissued on Thursday on the Jamaica Stock Exchange (JSE) website by JCSD Trustee Services Ltd, the trustee, inviting noteholders to vote on key proposals affecting bonds issued by AIC (Barbados) Ltd, Portland (Barbados) Ltd (PBL), and Specialty Coffee Investment Company Ltd. The 14 notes from the three companies controlled by Lee-Chin are collateralised by 1.06 billion of his shares in NCB Financial Group Ltd (NCBFG), the Kingston, Jamaica-headquartered company chaired by Lee-Chin, its largest shareholder.

In the amended and restated preliminary offering memorandum for the US$300 million NCBFG attempted to raise in July, the financial holding company stated:

“Approximately 50.5 per cent of our outstanding shares, controlled or ultimately held by our controlling shareholder and chairman, Michael A. Lee-Chin, are pledged as collateral to secure bonds issued by companies majority-owned by Lee-Chin, including AIC, AIC Global and Portland Holdings Inc.

“As of the date of this offering memorandum (July 21), certain of these bonds are delinquent with respect to principal and interest payments. A plan has been submitted to the relevant bondholders for approval, seeking a deferral and restructuring of the affected payment obligations. Approval of the plan by the bondholders remains pending. Given the delinquencies, and considering the possibility of future defaults, enforcement of the related security interest could result in our controlling shareholder and chairman losing control of the Group without the consent of our other shareholders or noteholders.”

The proposed restructuring spans both USD and JMD-denominated obligations, including:

• AIC (Barbados): US$161.43 million and J$2.2 billion (US$13.66 million);
• Portland (Barbados): US$164.21 million and J$320 million (US$2 million); and
• Specialty Coffee Investment: J$3.725 billion (US$23.14 million)

Negotiations between issuers and bondholders have been ongoing for over a year, triggered by missed interest payments and delayed principal redemptions.