NCB Financial, Trident Castle used as collateral in Portland bond raise
Published:Friday | January 1, 2021 | 12:14 AM
Portland Barbados Limited, part of billionaire Michael Lee-Chin’s Portland group of companies, is seeking to raise up to US$4 million, or nearly J$600 million, in a bond offer. Some shares in NCB Financial Group Limited, NCBFG, and the Lee-Chi- owned swanky Trident Castle villas in the parish of Portland in Jamaica – the parish of Lee-Chin’s birth – are being put up as security for the bond.
The amount of NCBFG shares being used as collateral is equivalent to 60 per cent the value of the bond debt being sought, but with a 40 per cent margin. The prospectus for the bond offer notes that AIC Barbados, the gurantor of the senior secured notes placement, will secure the offer with the first mortgage over Trident Castle, as well as “execution of Jamaica Central Securities Depository pledge form by the guarantor in relation to NCBFG ordinary shares with market value equivalent to 0.6 (times) the principal amount; subject to a maintenance margin of 0.4 (times)”.
NCB Financial Group, which is listed on the Jamaica and Trinidad and Tobago stock exchanges, is a super-rich financial entity with tentacles across the Caribbean region, including majority ownership of insurance giant Guardian Holdings. NCBFG is 52 per cent owned by Lee Chin’s AIC Barbados Limited. The Jamaica-based financial company’s latest filings indicate that Lee-Chin’s 52.1 per cent majority stake is held by one shareholder with five accounts controlling a total of 1.2 billion shares at September 30, 2020. The ultimate parent company is Portland Holdings Inc, incorporated in Canada and controlled by Lee-Chin, its chairman, who is also chairman of NCBFG.
At September 30, NCBFG had amassed assets of $1.8 trillion, had net operating income of more than $108 billion, and returned a net profit of $26.8 billion for the 2020 financial year ended September 30 – down from over $31 billion in 2019.
Trident Castle is an upscale villa property which Lee-Chin bought some years ago from retired architect and businessman Earl Levy.
The top-class assets are being put up with an eye on further expanding Portland’s investment network, with more acquisitions said to be on the cards.
“Management of Portland Barbados Limited has indicated that the purpose (of the bond raise) is for general corporate purposes, including acquisitions,” Robert Almeida, Lee-Chin’s investment point man and the managing partner of the affiliated Portland Private Equity, PPE, told the Financial Gleaner this week.
Portland Private Equity is not involved in the capital raise but is part of the Portland group, which includes Portland Barbados.
“The Portland group of companies is quite extensive and has many transactions in progress at any point in time,” Almeida said.
Portland Holdings includes CVM TV; Wallenford Coffee Company and Mavis Bank Coffee Factory; Trident Hotel and Blue Lagoon in Portland; Reggae Beach, now known as Bamboo Beach Club, in Ocho Rios, St Ann; Coral Springs tourism development in Trelawny; and Model Agricultural Production Limited, a super farm in St Catherine. Portland Holdings’ financial companies include NCBFG, National Commercial Bank Jamaica Limited, PPE, Guardian Holdings, and Canada-based investment advisory outfits Mandeville Group and Portland Investment Counsel.
Portland Holdings is also affiliated with the Jamaica Stock Exchange-listed Portland JSX Limited, PJX, which earns revenues from income and capital gains on its direct and indirect investments. PJX is not connected to the bond issue. PJX is a partner in Portland Caribbean Fund II, a private equity fund with a mandate to make investments in equity or debt securities of private companies located in the Caribbean and Latin America. The fund is managed by PPE, which has as its principal activity, making private equity and related investments in companies or other entities located principally in the Caribbean, Mexico and Venezuela.
GK Capital Management will act as the lead arranger for the Portland Barbados bond offer, which closes on January 11. The bond is being offered in two tranches; tranche A being at 6.25 per cent, but rises to 8.25 per cent in the event of default, and tranche B at 6.5 per cent, with 8.5 per cent in the case of default, according to the prospectus.
The bonds will pay interest quarterly and will repay the principal of tranche A at maturity in 12 months and tranche B at maturity in 24 months.
The minimum participation for accredited investors is set at US$50,000, and for minimum purchase investors at US$100,000.
The facility will be registered in Jamaica with the Financial Services Commission and will not be listed on any exchange, according to the term sheet, dated January 4, 2021.