AIC chairman Michael Lee Chin. - File

A meeting has been called for July 21 for just over 100 investors holding more than US$36 million (J$3.2 billion) of unpaid matured promissory notes that have become crucial to whether Michael Lee Chin is stripped of assets used to back the bond issue.

Technically, Lee Chin's AIC Barbados Limited (AICB) is said to be in default on the bonds, but his team up to yesterday, was still working feverishly to tie up one asset sale and stave off the July 21 meeting.

Bond holders say he is not invited to that meeting which will decide whether to enforce the terms of the trust deed governing the bonds, and take action that could include liquidating the assets or allow the billionaire just a little more time to get his share of Columbus Communication sold.

An enforcement vote of more than half the bond holders who attend and provided they account for more than 50 per cent of the value of the outstanding notes, could see instructions being given by the investors to trustee, Pan Caribbean Financial Services (PCFS) to sell some 877 million National Commercial Bank (NCB) shares; AICB's 20 per cent stake in the Caribbean fibre-optic telecoms firm, Columbus Communications, which operates in Jamaica under the Flow brand; as well as the NCB Towers, the imposing New Kingston property that houses Lee Chin's Jamaica corporate offices, an NCB branch, several government offices and a foreign embassy.

Lee Chin owns or controls as many as 1.68 billion or 68 per cent of the 2.46 billion NCB shares.

A recent financial assessment done by NCB Capital Markets Limited, the lead arranger for the AICB notes issued some six years ago, shows that at February this year more than 1.3 billion shares of AIC Barbados' 60 per cent stake in NCB had been pledged for various arrangements to finance acquisitions and for working capital, with 156.58 million shares remaining unrestricted.

Working behind the scenes to caucus bond holders support, AICB officials were indicating up to Thursday that efforts to secure unanimity and negate the need for the July 21 meeting were still continuing.

"It is not certain that the unanimity sought will not be achieved," said Robert Almeida, executive director of AIC Global Holdings and the man who heads up Lee Chin's Caribbean operations.

"We are very close to securing unanimous consent for the extension."

Almeida said that even if the meeting went ahead as planned and agreed on enforcement action, such action could take several forms and would not be limited to a sell-off of the pledged assets.

It was not immediately clear what the other options involved, but one investor told the Financial Gleaner that given the non-payment of principal amounts since March, several note holders had been insisting that interest payments be made quarterly instead of every six months.

This would see investors collecting their next interest payment in September.

Pan Caribbean has confirmed that the interest payment will be made in September.

Trust deeds

"The trustee hereby confirms that as at the date of the issue of this notice, the Issuer has met and paid all interest payments due and payable on all notes constituted by trust deeds under which Pan Caribbean Financial Services Limited acts as trustee.

The issuer has confirmed to the trustee that the interest rate on relevant notes will continue to be 13.25 per cent from June 11, 2009, to date of payment of principal in full on relevant notes.

The next payment on account of interest on relevant notes is scheduled to take place on September 11, 2009," the PCFS document indicated.

Lee Chin had indicated from as early as February this year that AICB would have been unable to meet maturing debts on March 11 and had asked for an extension to June 11, the initial date given by AICB for a deal to be concluded to offload the Columbus shares and settle the bond debt.

When that date was also missed, Lee Chin again flew to Jamaica to meet with anxious bond holders and sought an extension to November 27.

He was armed with documents from Royal Bank of Canada indicating that the Columbus shares transaction was advanced.

Information reaching the Financial Gleaner is that while a majority of investors voted to pass a resolution giving the nod to the extension, the trust deed for the bond issue requires a unanimous vote to trigger the extension and stave off a default.

One financial market source has noted that Lee Chin's failure so far to secure full agreement from the investors who attended the June 5 meeting at the Terra Nova Hotel in Kingston has created a technical default.

A notice from PCFS to bond holders dated June 30, and a copy of which has been obtained by the Financial Gleaner, said that of the 101 investors at the June 5 meeting, 91 voted to grant the extension, two voted against the resolution, while there were eight abstentions.

Unanimous approval

"In light of developments concerning the issuer's failure to secure unanimous approval from note holders for the maturity dates under relevant notes to be further extended to November 27, the trustee intends to propose at the above-mentioned meeting that note holders consider, and if thought fit, pass in the alternative, one or the other of two resolutions set forth in the attached document, the same to facilitate further action by the trustee, or the trustee refraining from any action, at this time, for and on behalf of the note holders of all relevant notes," the document read.

Efforts to get a comment from PCFS were unsuccessful as the responsible officer was said to be on leave and other officials were not immediately available.

The document issued to investors by the trustee pointed out that enforcement actions in respect of the AICB debt are to be determined by an ordinary resolution of note holders. It did not specify what actions might be taken.

AICB's total debt to bond holders is US$155 million (J$13.8 billion).

About US$108 million of this is owed to Jamaican investors, US$47 million of which is due this year, with US$36.67 having passed the June 11 maturity date.

huntley.medley@gleanerjm.com