Bondholders put Lee Chin under pressure
Holders of AIC (Barbados) notes were yesterday informed that the Michael Lee Chin-owned firm was unable to make good on a promise to honour bond payments which became due today, and were issued with three options by trustee PanCaribbean.
“We were unable to meet our obligations due in part to the prevailing financial crisis which has made it difficult to sell assets,” executive director of AIC Global Holdings, Robert Almedia, told the Observer last night. “Nevertheless, we have generated internal cash and are now proposing to pay 30 per cent of the principal in cash.”
Added Almedia: “There is an interest payment due today (Friday) and we will meet that. We fully intend and will meet our interest payments going forward. Investors will get the same collateral which is essentially NCB. We will issue a new note for 70 per cent of the face value. It will be a two-year note with a 12 per cent interest rate paid in US dollars on a quarterly basis. I think this is a good deal for the bondholders. Let’s not forget that NCB recently posted profits of J$10.2 billion and Columbus Communications has recently completed a US$450-million bond offering. We will make payments as and when we divest the assets and will make good to our bondholders.”
According to the PanCaribbean circular, the first option is to accept AIC’s offer, the second is to take shares in Lee Chin’s National Commercial Bank (NCB), and the third is to give instruction for the shares in NCB to be sold.
Lee Chin, who is also lead principal of Canadian mutual fund company AIC, issued a number of bonds to finance his rapid expansion across the Caribbean. To date his investments in the region stand at around US$1 billion. Having missed a June deadline this year to make good on paying out bondholders of AIC (Barbados), Lee Chin’s Caribbean holding company, he was able to secure an extension until November 27. The notes come up to a total of US$155 million.
Interest on the bonds to November was set at 13.25 per cent with around US$109 million in AIC bonds at stake with US$60 million maturing this year. The remainder matures between January 2010 and April 2011.
Bondholders will be holding a meeting a week from today to consider the offers.
