After years of waiting on their fixed income investments, like bonds, to mature, several investors are becoming increasingly angst-ridden as the issuers of these debts struggle to repay the principal of the money they borrowed in the past.

Two entities which have sought extensions are Portland (Barbados) Limited (PBL), a company under the Michael Lee-Chin-controlled Portland Holdings Inc, and Outsourcing Management Limited, which trades as Itel and is run by founder Yoni Epstein. Both entities borrowed money from investors in the last four years with a portion of those bonds or the tranches to have been repaid from September. However, JCSD Trustee Services Limited, the trustee for the bonds have yet to receive any payment from either entity which has instead sought extensions for three years and 90 days, respectively, to cure their situations.

“Portland (Barbados) Limited (“Portland Barbados”) hereby requests of JCSD Trustee Services Limited (the trustee under the trust deed) that you remit to noteholders such ballot instruments as JCSDTS considers appropriate in order that noteholders may have the opportunity to vote on the proposed extension of the note issued under the trust deed. Again, we take very seriously the confidence reposed in Portland Barbados (as the issuer under the note) and we do hope that the noteholders will be supportive of the amendments, paving the way for the extension to facilitate the timely discharge of all obligations under the note,” said Lee-Chin in a November 11 letter to Andrea Kelly, JCSD general manager.

According to a November 18 letter sent to noteholders, PBL is requesting noteholders to vote on four proposed changes by December 5. These changes include extending the bond (tranche B USD and tranche B USD indexed note) by an additional three years to October 29, 2027, increase the interest rate from 8.00 per cent to 9.65 per cent effective October 29, 2024, the collateral package include a debt service reserve account (DRSA) and an annual amortisation of the principal balance.

The term sheet that was sent to investors outlines that the principal amount on the note is US$9.74 million and that the amortisation of principal would see investors receiving US$320,549.12 in October 2025 and October 2026 with the remaining US$9.10 million to be paid in October 2027. The collateral package would include 25,306,876 ordinary shares of NCB Financial Group being pledged to the JCSD and a property in Anchovy, Portland which has a value of US$6.2 million, but would have a mortgage of US$1.98 million registered against this bond. NCBFG traded at $50.57 on Thursday which would value the shares to be pledged at $1.28 billion or US$8.04 million. If there is a continuance on an event of default, the agreed rate would be two per cent above the new 9.65 per cent interest rate.

This is the latest attempt by a Lee-Chin connected company to extend the tenure on a debt instrument in 2024. A recent Jamaica Gleaner article explained that the Jamaican-Canadian billionaire is currently seeking a noteholders meeting to establish a timeline to repay the principal for a bond issued by Specialty Coffee Investment Limited. That bond apparently matured in December 2023 and was extended to April 2024 before bondholders struck down another extension request in June.

Earlier this year, another PBL bond which was issued in Trinidad & Tobago, had apparently matured on April 30 for US$23 million. That bond which was originally priced at 8.25 per cent was increased to 10.25 per cent and was repaid in portions between May to September, with the Trinidad Guardian noting that PBL repaid most of that bond.

AIC (Barbados) Limited, another company under the Portland Holdings empire and guarantor for PBL and Specialty Coffee bonds, also sought an extension in April for a US$10 million bond which did not garner enough take up in its refinancing round. AIC (Barbados) wanted the remaining portion of US$7.86 million to be extended to January 2025. AIC (Barbados) directly owns the majority stake in NCBFG.

Caydion Campbell, trustee of Stocks & Securities Limited (SSL), told creditors and claimants at an October 15 meeting that a PBL extension request was voted down by himself in his capacity to oversee the SSL clients’ portfolios. He explained that a PBL bond matured on October 1 and that interest was received up to that date, but had no further update from update from the JCSD to tell persons present at the meeting.

A financial advisor told the Jamaica Observer that their clients were not happy with the situation and were eager to receive their principal to tend to their other activities such as expanding their businesses or supplementing their cash reserves amid a slowdown in tourism and construction industry. The delay in receiving principal also impacts reinvestment opportunities into other assets as interest rates begin to go down.

An AIC (Barbados) bond with a 6.75 per cent interest rate is set to mature by June 2025; a PBL bond with a 6.75 per cent interest rate and another with a 7.25 per cent interest rate are to mature in 2026 and a Specialty Coffee bond should mature in January 2025.

“Due to certain unforeseen circumstances, we find ourselves in need of additional time to ensure that we can meet our obligations under the trust deed. OML hereby requests a postponement of the Maturity Date for all the Facility 2 Bonds, which are currently scheduled to mature on September 10, 2024. We are respectfully seeking a postponement for a period of 90 days from the original maturity date such that the new maturity date would be December 9, 2024,” stated Epstein, in his September 9 letter to Andrea Kelly at the JCSD.

The JCSD sent a letter on September 10 which outlined Itel’s extension request and need for a response by September 27. Another JCSD letter on the same day noted that if principal was not paid within seven days, an event of default would occur, and interest would be applied at the default rate.

However, a new JCSD letter dated November 7 stated, “The company is seeking consent to reopen the ballot process to accept the votes for bondholders who missed the deadline for closure of the first ballots and for bondholders who wish to change their vote.”

A virtual bondholder meeting was convened on Zoom on November 14 to facilitate voting on Itel’s request. The outcome of that meeting is not known by this publication.

“This additional time will allow us to secure the necessary funding to meet our obligations in relation to the Facility 2 Bonds. We understand the importance of adhering to the terms of the trust deed and assure you that that this extension will allow us to satisfy our obligations in full. OML further requests that as trustee you give immediate administrative notice of this request to the bondholders and convene a meeting of the bondholders to approve the postponement of the maturity date,” Epstein said in his September 9 letter.

Itel raised a $3.1-billion bond in November 2021 which was split across two series over a three- and five-year tenure. Whilst Itel is a private company, Portland JSX Limited and Pan Jamaica Group Limited both had financial exposure to the company. Pan Jamaica Group wrote down its equity investment in the company while Portland JSX wrote down its preference share investment in Itel and saw a reduction in its asset base related to Itel. Itel is also closing its Guyana operations this year which will see 400 job losses.

The last six years have been difficult on fixed income investors who have had to endure different losses. Niquan Energy Trinidad Limited began winding-up earlier this year, a development which burnt a hole through the pockets of several investors who held the bond, with JMMB Group Limited writing off more than $5 billion in its 2024 audited financials. Investors in Equityline Investment Mortgage Corporation have effectively had to write off US$5.37 million with the company which was delisted off the JSE and is in hot water in Canada. Mystic Mountain’s debt default was resolved after more than three years with its assets and business sold to new owners. Digicel Group and the Republic of Barbados also did haircuts on their debt instruments in recent years.

Whilst non-performing loans and past due loans are still below three per cent of loans by commercial banks, both figures have been trending upwards with past due loans up ten per cent to $49.14 billion as of September 30. The current economic tightness has also seen several listed companies extending the maturity of their maturing debt and other liabilities while others have done roll for roll. This is where company A owes company B, but is also owed by company B. Both companies agree to extend the maturity of those debts into the future and limit any additional pressure on cashflows.