On Mon­day morn­ing, a very re­li­able source told me that Port­land Bar­ba­dos, a com­pa­ny con­trolled by Ja­maican busi­ness­man Michael Lee-Chin, had de­fault­ed on a US$23 mil­lion bond that is owned by a num­ber of T&T in­sti­tu­tion­al and high net-worth in­vestors. There was al­so in­for­ma­tion that Mr Lee-Chin had sched­uled a meet­ing of bond­hold­ers to pro­pose a 90-day ex­ten­sion on the ma­tu­ri­ty date of the bond.

Im­me­di­ate­ly af­ter the in­for­ma­tion was re­ceived, a mes­sage was sent to Mr Lee-Chin out­lin­ing the in­for­ma­tion re­ceived and re­quest­ing a com­ment on the sta­tus of the US$23 mil­lion bond.

His re­sponse was, “De­fault does not hap­pen un­til the grace pe­ri­od ex­pires,” be­fore ex­plain­ing that the grace pe­ri­od was sev­en busi­ness days.

“There won’t be a de­fault,” Mr Lee-Chin stat­ed, adding, “I don’t see the val­ue of this pre­ma­ture re­port­ing. Is­suers get ex­ten­sions all the time.”

On Mon­day af­ter­noon, a May 1 let­ter from Re­pub­lic Bank Ltd—in its ca­pac­i­ty as trustee of the US$23 mil­lion, 8.5 per cent bond— ad­vised the Port­land Bar­ba­dos bond­hold­ers that the prin­ci­pal and in­ter­est on the bond, which ma­tured and be­came due on April 30, 2024, had not been re­ceived.

That let­ter stat­ed that it is an event of de­fault by Port­land Bar­ba­dos “if the com­pa­ny fails to pay with­in sev­en busi­ness days fol­low­ing the due date, any prin­ci­pal, in­ter­est and ar­rears of in­ter­est payable un­der this trust deed.”

There­fore, ac­cord­ing to the let­ter, if Port­land Bar­ba­dos did not make the April 30 pay­ment by the close of busi­ness on May 9, (to­day) “an event of de­fault would be deemed to have oc­curred.”

I was in­formed yes­ter­day that the bond­hold­ers, at their meet­ing on Tues­day, agreed to grant the 90-day ex­ten­sion re­quest­ed by Mr Lee-Chin. That was al­so re­port­ed in the Trinidad Ex­press.

Al­so yes­ter­day, the Ja­maica Ob­serv­er re­port­ed that two oth­er com­pa­nies that Mr Lee-Chin is as­so­ci­at­ed with—AIC (Bar­ba­dos) Ltd and Spe­cial­ty Cof­fee In­vest­ments Com­pa­ny—al­so have had to seek ex­ten­sions of the ma­tu­ri­ty dates of their bonds.

Re­gard­ing AIC (Bar­ba­dos) Ltd, Mr Lee-Chin wrote a let­ter to the gen­er­al man­ag­er of Ja­maica Cen­tral Se­cu­ri­ties De­pos­i­to­ry (JCSD) Trustee Ser­vices on April 11, 2024, seek­ing an ex­ten­sion of the fixed rate US$10 mil­lion se­cured notes by Bar­ba­dos com­pa­ny. That bond be­came due on Jan­u­ary 31, 2024.

“We have been work­ing with Ster­ling As­set Man­age­ment Ltd to re­fi­nance the notes, with lim­it­ed suc­cess in on­ly be­ing able to re­fi­nance a por­tion of the notes. We here­by re­quest a one-year ex­ten­sion of the due date for the re­main­ing por­tion of US$7,860,758.10...pro­vid­ing a new ma­tu­ri­ty date of Jan­u­ary 31, 2025.

“For the ex­ten­sion pe­ri­od, be­ing from Jan­u­ary 31, 2024 to Jan­u­ary 31, 2025, AIC Bar­ba­dos will be pay­ing note­hold­ers in­ter­est at the rate of 8.25 per cent per an­num.”

Is it un­usu­al that Mr Lee-Chin would write re­quest­ing an ex­ten­sion of a bond on April 11, 2024, when that bond ma­tured on Jan­u­ary 31, 2024?

The Ja­maica Glean­er first re­port­ed on April 24, 2024, that the bond­hold­ers of Spe­cial­ty Cof­fee In­vest­ments Com­pa­ny—a com­pa­ny that is owned by Port­land Hold­ings Inc, which is con­trolled by Mr Lee-Chin—”vot­ed to ex­tend the ma­tu­ri­ty of a bond by three months.” That ar­ti­cle al­so quot­ed the gen­er­al man­ag­er of JCSD Trustee Ser­vices as say­ing, “The bond­hold­ers vot­ed in favour of an ex­ten­sion to April 30 and in­ter­est will be paid.”

A Vic­to­ria Mu­tu­al Wealth Man­age­ment doc­u­ment dat­ed De­cem­ber 13, 2021, in­di­cates that the cof­fee com­pa­ny was look­ing to raise J$1.9 bil­lion (US$12.3 mil­lion) in three tranch­es: Tranche A was for a max­i­mum of two years at 9.75 per cent; Tranche B was up to a max­i­mum of three years at 7.25 per cent, what was de­scribed as a US dol­lar in­dexed; and Tranche C, al­so up to a max­i­mum of three years in US dol­lars.

What does this mean?

Why would three com­pa­nies con­trolled by Mr Lee-Chin be seek­ing ex­ten­sions of bond ma­tu­ri­ties in 2024?

One ex­pla­na­tion is that Mr Lee-Chin may not have the US-dol­lar liq­uid­i­ty to make these pay­ments. If he had the US dol­lars avail­able to pay the ma­tur­ing bonds, it is quite like­ly he would have done so.

In terms of con­se­quences, bonds is­sued by the com­pa­nies con­trolled by Mr Lee-Chin—Port­land Bar­ba­dos, AIC Bar­ba­dos and Spe­cial­ty Cof­fee In­vest­ments Ltd—as well as the NCB Fi­nan­cial Group are wide­ly held by in­sti­tu­tions and in­di­vid­u­als in both Ja­maica and in T&T.

For ex­am­ple, in its 2023 an­nu­al re­port, the Unit Trust Cor­po­ra­tion’s US Dol­lar In­come Fund lists NCBFG’s US$75 mil­lion 8.50 per cent term loan com­ing due on May 5, 2026, as its fourth largest hold­ing. That in­vest­ment con­sti­tutes 1.72 per cent of the US$234 mil­lion that the fund has un­der man­age­ment.

NCBFG bonds are al­so a top 10 in­vest­ment of the GK Ja­maican dol­lar mu­tu­al fund, which the Unit Trust Cor­po­ra­tion launched last year in a joint ven­ture part­ner­ship with GraceKennedy Ltd, the pub­lic com­pa­ny that is list­ed on both the Ja­maica and Trinidad and To­ba­go stock ex­changes.

Al­so, Guardian Hold­ings Ltd (GHL), which is ma­jor­i­ty-owned by NCBFG, is al­so be­lieved to own a sig­nif­i­cant num­ber of its par­ent com­pa­ny’s shares and bonds. A GHL ex­ec­u­tive did not im­me­di­ate­ly re­spond to a re­quest for clar­i­fi­ca­tion on how much NCBFG debt the T&T com­pa­ny car­ries in its var­i­ous funds and in­vest­ment ac­counts.

How will Mr Lee-Chin re­pay his debts?

On Oc­to­ber 6, 2023, Mr Lee-Chin ob­tained a fi­nal award of US$43.59 mil­lion, plus in­ter­est un­der the rules of the Unit­ed Na­tions Com­mis­sion on In­ter­na­tion­al Trade Law. That re­lates to an in­vest­ment dis­pute with the Do­mini­can Re­pub­lic un­der the Cari­com-Do­mini­can Re­pub­lic Free Trade Agree­ment.

He brought the claim against the Do­mini­can Re­pub­lic un­der the free trade agree­ment, re­gard­ing his in­ter­est in a Do­mini­can com­pa­ny, which held a long-term con­ces­sion con­tract to man­age a land­fill in San­to Domin­go.

In 2017, the Do­mini­can Re­pub­lic took mil­i­tary con­trol of the land­fill as well as tak­ing ac­tion to ter­mi­nate the con­ces­sion based on an al­leged en­vi­ron­men­tal emer­gency.

Mr Lee-Chin claimed sev­er­al vi­o­la­tions of the free trade agree­ment, in­clud­ing ar­bi­trary acts in­tend­ed to force him to op­er­ate the land­fill with­out re­ceiv­ing a fair tip­ping fee.

On No­vem­ber 6, 2023, ex­act­ly one month af­ter the ar­bi­tra­tion tri­bunal found in the Ja­maican busi­ness­man’s favour, the Do­mini­can Re­pub­lic sub­mit­ted a re­quest for rec­ti­fi­ca­tion of the fi­nal award, based on the coun­try’s sub­mis­sion that there were er­rors of com­pu­ta­tion, the ap­pli­ca­tion of an in­cor­rect dis­count rate and a mis­cal­cu­la­tion of the op­er­at­ing com­pa­ny’s cash flows.

In its Feb­ru­ary 29, 2024 de­ci­sion on the Do­mini­can Re­pub­lic’s re­quest for rec­ti­fi­ca­tion, the tri­bunal dis­missed the coun­try’s claim in its en­tire­ty.

The tri­bunal al­so or­dered the Do­mini­can Re­pub­lic to pay all costs re­sult­ing from the sub­mis­sion of its re­quest for rec­ti­fi­ca­tion in­clud­ing claimant’s costs, the ar­bi­tra­tors’ fees and ex­pens­es, and the di­rect ex­pens­es in­curred in this pro­ceed­ing.

If the Feb­ru­ary 29 fil­ing on the web­site of the In­ter­na­tion­al Cen­tre for Set­tle­ment of In­vest­ment Dis­putes is the last word on the is­sue, one imag­ines that the Do­mini­can Re­pub­lic would have tak­en steps to trans­mit the US$43.59 mil­lion, plus in­ter­est to Mr Lee-Chin’s pre­scribed ac­count.

On re­view­ing the fi­nal award from the ar­bi­tra­tion tri­bunal, Mr Lee-Chin told the Ja­maica Ob­serv­er, “I am very pleased with the re­sult and I feel I have been fi­nal­ly vin­di­cat­ed.”

He went on to note that he “ex­pects the Do­mini­can Re­pub­lic will im­me­di­ate­ly sat­is­fy the fi­nal award and ev­i­dence to the in­vestor com­mu­ni­ty, in­clud­ing all Ja­maican in­vestors, that the Do­mini­can Re­pub­lic, once found li­able, ho­n­ours its in­ter­na­tion­al oblig­a­tions.”

Has the ar­bi­tra­tion award been trans­mit­ted or is the north Caribbean coun­try in breach of its com­mit­ment to ho­n­our the award of the in­de­pen­dent tri­bunal?

One as­sumes that when Mr Lee-Chin re­ceives the ar­bi­tra­tion award, he will be in a po­si­tion to set­tle sev­er­al of the out­stand­ing bond.