Michael Lee Chin, chairman of AIC Limited, will have to reassure bondholders that he can and will repay them. - File

Michael Lee Chin is close to a deal to sell a company, in whole or part, from among his prized Caribbean investment portfolio, to help AIC Barbados Limited pay off an estimated US$170 million, or around J$15 billion in principal and interest on maturing promissory notes being held by Jamaican investors.

AIC Barbados has asked for more time to pay off the debt, which Lee Chin has promised to do by June.

With sources close to AIC indicating to Wednesday Business that the asset to be offloaded to raise the required cash was not dependent on the equities or international money markets - neither now hospitable to the sale of any AIC property - Lee Chin is expected to bring convincing information when he meets note holders in Kingston at 3 pm today.

Strategies to monetise

Signaling that a deal, independent of the stock market transaction or a another foray into the money markets, was advanced, Robert Almeida, executive director of AIC Global Holdings and the man in charge of Lee Chin's Caribbean operations, said Tuesday: "Strategies to monetise a sufficient amount of these assets to fully pay off the notes are well under way."

That Lee Chin is himself addressing investors on the maturity restructuring of a commercial paper that market players indicated was a fairly routine investment matter, is being seen as significant.

Based on information already passed to note holders, the investment houses handling the money-market transactions, the investing parties appear less than anxious.

"For the restructuring, there was a 100 per cent sign-up among investors in the tranche handled by First Global," Robert Drummond, president of First Global Financial Services, one of the arrangers of the AIC paper, said yesterday.

Chris Williams, head of NCB Capital Markets, the lead arranger for the instrument, was also upbeat about the interest of investors, to whom it distributed the notes said: "Less than 0.5 per cent of our clients hold these notes and we have been in extensive discussions with them individually as we are very interested in ensuring that their investment objectives are realised."

The trustees for AIC Barbados debt is Pan Caribbean Financial Services, whose president and CEO, Donovan Perkins, was cool when commenting on the matter yesterday. "Our role is very clear. We act on the instructions of the note holders to secure their interests and ensure timely payments by the issuer," Perkins said, noting that investors would have further assurances from Lee Chin at today's meeting.

Reassuring information

While the information emerging would be reassuring to investors, being asked to wait another three months for payout on the US$155 instruments, which were first issued in 2003, it also narrows the list of possible assets AIC might be looking to sell.

Heading the list is Columbus Communications, parent to FLOW, the fibre optic cable business, in which Lee Chin's Portland Hold, AIC Barbados and AIC private equity fund are invested.

Lee Chin, through his companies, has a Caribbean investment portfolio, which AIC Barbados said in statement last week was worth US$1 billion. It includes the publicly listed National Commercial Bank (NCB), in which Lee Chin holds 61.5 per cent, down from the 76 per cent stake he bought from the Jamaican government in March 2002 for J$6 billion, or less than US$130 million at the time. NCB posted J$8.7 billion in net revenue last year.

NCB shares

Some of the 2.4 billion shares in NCB were used to collateralise the notes, AIC Barbados confirmed. With the banks stocks depressed at $12.30, it is hardly an opportune time for the investment company to sell.

Advantage General Insurance, with an asset base of J$7.3 billion is too small to realise the J$15 billion AIC is looking to raise.

Columbus Communi-cations, which trades in Jamaica and Trinidad as Flow, was bought by Lee Chin in 2004 for US$80 million from a consortium of telecoms firms that spent US$450 million in the 1990s to run a fibre-optic cable from Florida to link 22 countries in the Caribbean, Central America and South America. Last month AIC Almedia told sister publication the Financial Gleaner that Columbus was worth between US$200 million and US$300 million.

There is talk in business circles, that Claro, a recent entrant in the Jamaican mobile phone market - and owned by the Mexican Carlos Slim-led América-Móvil - with a footprint of Latin American operations almost identical to Columbus infrastructural platform, is interested in buying a part or all of Columbus.

"I can't comment on any such speculation," Almeida replied to queries from Wednesday Business yesterday.

Nothing to fear

Meanwhile, the AIC executive said note holders had nothing to fear as the money would be raised to meet the promised June payout.

"This is certainly not a default but a restructuring," he maintained.

"AIC Barbados Limited has been having open and positive discussions with its note holders, resolute in discharging our commitment to them."

He added: "The debt of AIC (Barbados) Limited is approximately US$155 million. This represents less than 15 per cent leverage on assets owned by AIC Barbados Limited. The debt is primarily in the form of promissory notes which would have been distributed in private placements, that is, (a) narrow distribution. Note holders would be primarily from Jamaica. The notes are secured by the shares of blue-chip organisations or similar collateral owned directly by AIC Barbados Limited."

Both AIC Barbados and NCB group, in statements issued last week, stressed that no AIC-affiliated entity is a holder of the commercial paper being restructured.

"It is important to note that this restructuring has no impact on the business holdings of AIC (Barbados) Limited, as these each operate on a stand-alone basis and intercompany transactions have been kept to a minimum," the statement said.

National Commercial Bank of Jamaica, the largest holding of AIC Barbados, is independently capitalised.

huntley.medley@gleanerjm.com

The top of the NCB Towers in New Kingston. The banking group has moved to reassure investors that NCB is not entangled in the AIC Barbados bond call. - File