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Lee Chin to redeem US$19m AIC bonds

Published:Wednesday | August 18, 2010 | 12:00 AM
Billionaire investor Michael Lee Chin is three months ahead of schedule on debt repayment.
Donovan Perkins, president and chief executive officer of Pan Caribbean Financial Services, says the early payment should comfort investors. - File
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AIC Barbados Limited has signalled its intention to redeem another US$19 million owed to bondholders but is not disclosing the source of the cash for the payment.

The final US$60 million should be redeemed within another 16 months.

The 20 per cent principal payment will be made on the same date as the next interest payment, on September 11, three months ahead of the revised schedule agreed last year after AIC went into technical default on some of the bonds.

Interest will be paid at 13.25 per cent.

"With the interest payments on schedule, this payment of principal ahead of schedule and with adequate security remaining in place, people who were nervous before should feel comforted," said Donovan Perkins chief executive officer of Pan Caribbean Financial Services.

Under the new schedule, 30 per cent was paid out last December; another 20 per cent was to have been paid on December 11, 2010 but will now be paid next month; and the final, 50 per cent by December 11, 2011.

AIC Barbados, the vehicle used by billionaire Michael Lee Chin for Caribbean fundraising and investment, will incur no penalty for the early redemption of the second instalment, having given more than the required seven days' notice to trustee PanCaribbean.

PanCaribbean advised bondholders of the payment by circular issued August 10.

"The issuer has now given notice to the trustee that they intend to pay before the due date an additional 20 per cent of the original principal value of notes held by each note holder on the next interest payment date," the trustee said.

Perkins said Tuesday that the upcoming redemption would amount to US$19.27 million, narrowing the outstanding debt from US$79.42 million at August 1 to US$60.15 million.

Last year, Lee Chin missed three different deadlines for the repayment of a maturing US$42 million of the bonds that were issued some seven years ago.

In December, following months of agitation by creditors, including just over 100 Jamaican holders of the AIC Barbados bonds, the Jamaican-Canadian investor hammered out an extension agreement to stretch out payments of principal and interest on the bonds over two years to December.

Principal payment

AIC Barbados made a 30 per cent principal payment of US$46.5 million at the time, with investors rebuffing Lee Chin's proposed 12 per cent interest rate and demanding a premium 13.25 per cent instead.

With 877 million shares of his 64 per cent stake in National Commercial Bank already on the line, having been pledged as collateral, Lee Chin slapped down suggestions that his newly acquired shares in Manulife, the Canadian insurance and financial services giant, be offered up as further backing for the debt to support his 12 per cent offer.

Earlier, prime real estate, NCB Towers, in New Kingston and a 20 per cent stake in cable operators Columbus Communications had also been pledged as collateral.

Contacted this week, AIC Barbados officials declined to comment on the source of the cash to be used to pay down the debt on September 11.

Perkins also declined comment, saying such disclosures were AIC's to make.

Up to December last year, the planned sale of Lee Chin's stake in Columbus from which he said he intended to honour the bond debt, had not materialised.

"I apologise to noteholders, I'm sorry to put you through any inconvenience, but the Columbus sale did not come to fruition," Lee Chin told Jamaican creditors in Kingston then.

This week his spokespersons would not be drawn on whether anything had changed in relation to the attempted sale.

The December 2009 principal payment had been made from dividends Lee Chin received from the cash-rich NCB as well as from the investor's share of a five-year US$450-million bond issued by Columbus International, parent company to Columbus Communications.

But Lee Chin also said that, if a bank loan that he was negotiating at the time came through, he would have redeemed as much as 50 per cent of the debt by yearend.

No word was forthcoming from AIC Barbados on the outcome of the loan talks.

business@gleanerjm.com