Re­pub­lic Bank Ltd (Trust and As­set Man­age­ment Di­vi­sion) on Thurs­day de­clared that Port­land (Bar­ba­dos) Ltd, a com­pa­ny con­trolled by Ja­maican en­tre­pre­neur Michael Lee-Chin, "has de­fault­ed on its oblig­a­tions un­der the sup­ple­men­tal trust deed to pay to note­hold­ers the fi­nal bul­let pay­ment" of US$23 mil­lion on April 30, 2024.

Re­pub­lic Bank al­so said the fail­ure by Port­land (Bar­ba­dos) to make the fi­nal bul­let pay­ment with­in sev­en busi­ness days from April 30, "con­sti­tut­ed an event of de­fault (as de­fined in the trust deed) and note­hold­ers and/or trustees are en­ti­tled, un­der the trust deed, to take such en­force­ment ac­tions as are per­mit­ted un­der the trust deed."

The sev­en busi­ness days is the grace pe­ri­od al­lowed in the trust deed be­tween the par­ties. The grace pe­ri­od end­ed on May 9.

The note was is­sued on April 28, 2022, for two-year term and paid an in­ter­est rate of 8.25 per cent.

The de­c­la­ra­tions by Re­pub­lic Bank, serv­ing as the trustee for the note, came in a three-page agree­ment to note­hold­ers, dat­ed May 9. The let­ter was signed by Lee-Chin as di­rec­tor of Port­land Bar­ba­dos and Jen­nifer Dears­ley as au­tho­rised sig­na­to­ry.

The cur­rent col­lat­er­al for the US$23 mil­lion note is US$4 mil­lion in cash, as well as shares in Ja­maica's NCB Fi­nan­cial Group (NCBFG), which were pledged with the of­fi­cial stock ex­changes of Ja­maica and Trinidad and To­ba­go. Those shares would have been pledged by Lee-Chin, who is list­ed as the ma­jor­i­ty share­hold­er of NCBFG, as at March 31, 2024 in the com­pa­ny's May 9 half-year re­port, with a to­tal of 1,445,299,340 shares.

On April 28, 2022, around the time the NCBFG shares were pledged, the fi­nan­cial hold­ing com­pa­ny trad­ed at J$111. Yes­ter­day, NCBFG closed at J$63.70 on the Ja­maica Stock Ex­change, which is a de­cline of 42.6 per cent since the note was is­sued.

In the agree­ment, Port­land Bar­ba­dos al­so stat­ed, "The com­pa­ny (mean­ing Port­land) by sign­ing this agree­ment ac­knowl­edges and agrees that as of May 9, 2024, an event of de­fault has oc­cured and the note­hold­ers are en­ti­tled to ex­er­cise their en­force­ment and oth­er rights un­der the trust."

Port­land Bar­ba­dos al­so ac­knowl­edged and agreed that by sign­ing the agree­ment, it en­tered in­to a re­pay­ment plan that was agreed to by a ma­jor­i­ty of the note­hold­ers on May 9.

The ba­sis of the re­pay­ment plan is that the note­hold­ers should re­ceive pay­ments in May, June and Au­gust.

Ac­cord­ing to the let­ter, Port­land Bar­ba­dos agreed to the fol­low­ing:

i) "The com­pa­ny (mean­ing Port­land Bar­ba­dos) to pay to the trustee the sum of US$4 mil­lion to­geth­er with in­ter­est due and pay­bale as at April 30, 2024 on/be­fore May 29, 2024;

ii) "The com­pa­ny to pay to the trustee the sum of US$4 mil­lion on/be­fore June 15, 2024;

iii) The com­pa­ny to pay to the trustee the sum of US$8 mil­lion to­geth­er with in­ter­est, as set out be­low...due and payable as at Au­gust 15, 2024 on/be­fore Au­gust 15, 2024;

iv) "The com­pa­ny will pay to the trustee as part of the Au­gust pay­ment, in­ter­est cal­cu­lat­ed at 10.25 per cent per an­num, be­ing the in­ter­est rate spec­i­fied in the sup­ple­men­tal trust deed (8.25 per cent), plus the de­fault rate (of 2 per cent). How­ev­er, should the com­pa­ny de­fault in any of its pay­ment oblig­a­tions as spec­i­fied in this agree­ment, the com­pa­ny will pay note­hold­ers in­ter­est at a rate of 12.25 per cent per an­num, be­ing the de­fault rate (2 per cent), plus the cur­rent rate payable of 10.25 per cent."

That means Port­land Bar­ba­dos agreed to pay the trustee US$16 mil­lion plus in­ter­est be­tween May 29 and Au­gust 15, 2024. The agree­ment con­tin­ued:

v) The com­pa­ny (Port­land Bar­ba­dos) has no ob­jec­tion to the trustee mak­ing the fol­low­ing dis­tri­b­u­tions be­tween May 20, 2024 and Au­gust 15, 2024 to note­hold­ers:

a) Dis­tri­b­u­tion to the note­hold­ers on a pro-ra­ta ba­sis on/be­fore May 29 of the cur­rent cash col­lat­er­al of US$4 mil­lion;

b) Dis­tri­b­u­tion to note­hold­ers on a pro-ra­ta ba­sis on/af­ter May 29, 2024, of US$4 mil­lion plus in­ter­est from the May pay­ment;

c) Dis­tri­b­u­tion to note­hold­ers on a pro-ra­ta ba­sis on/af­ter June 15, 2024, of US$4 mil­lion from the June pay­ment; and

d) Fi­nal dis­tri­b­u­tion to note­hold­ers of the re­main­ing prin­ci­pal (US$8 mil­lion) and in­ter­est on/af­ter Au­gust 15, 2024 from the Au­gust pay­ment.

As out­lined in the dis­tri­b­u­tion sched­ule, the note­hold­ers are due to re­ceived a to­tal of US$20 mil­lion be­tween May 29 and Au­gust 15. The agree­ment does not ex­plain why the note­hold­ers are due to re­ceive US$20 mil­lion and not the US$23 mil­lion face val­ue of the note.

Guardian Me­dia sent a mes­sage to Lee-Chin ear­ly last Fri­day af­ter­noon, in­form­ing him that it had sight of the Re­pub­lic Bank agree­ment, quot­ing key el­e­ments of it and ask­ing him to com­ment. He re­spond­ed that af­ter­noon to say, "I just spoke to the trustees and they said cat­e­gor­i­cal­ly that an event of de­fault has not oc­curred."

Lat­er last Fri­day, Lee-Chin was sent a copy of the agree­ment by What­sApp and was asked to con­firm whether the sig­na­ture at the end of the three-page let­ter was his. He did not re­spond im­me­di­ate­ly.

On Sun­day morn­ing, Guardian Me­dia wrote to him again, ask­ing him to con­firm that the sig­na­ture was his. He re­quest­ed time to be al­lowed to talk with the trustee, in or­der to dis­cuss send­ing an of­fi­cial state­ment to the news­pa­per on the is­sue. Up to last night, no state­ment had been re­ceived.