The issue of a company named Portland (Barbados) Ltd, which is controlled by iconic Jamaican investor Michael Lee-Chin, missing the US$23 million bullet payment on April 30, 2024, has attracted considerable attention in the financial communities of both T&T and Jamaica, and possibly beyond.
One of the most recent developments in this matter is a letter issued by Republic Bank Ltd’s trust services division dated Tuesday May 14. That letter was written to Portland (Barbados) Ltd and addressed to Mr Lee-Chin.
In that letter, the general manager of Republic Wealth Management, under which falls the bank’s trust services division, wrote:
“In relation to your request by letter dated May 13, 2024, the trustee confirms that the letter agreement contains an accurate recital of the facts in this matter, including the proposal by Portland (Barbados) Ltd, which was accepted by noteholders by the passage on an extraordinary resolution.”
The letter agreement refers to the May 9 document issued by Republic Bank to the noteholders of the two-year US$23 million note (bond) that paid interest of 8.25 per cent and matured on April 30, 2024.
The fact that the trustee confirmed that the letter agreement “contains an accurate recital of the fact in this matter,” is extremely important, it seems to me, because it affirms that the letter that the T&T Guardian quoted from on Tuesday, under the headline ‘Lee-Chin ‘defaults’ on US$23M note’ is legitimate and authentic.
Referring to Portland (Barbados) Ltd as the company, the May 9, 2024 letter from Republic’s trust services division states, under the rubric, background states:
2C—”Whereas on April 30, 2024, the company HAS DEFAULTED on its obligations under the supplemental trust deed to pay to noteholders the final bullet payment” of US$23 million;
2D—”Whereas the company’s failure to pay the final bullet payment within seven days from the April 30, 2024, constitutes 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.”
Again referring to Portland (Barbados) Ltd, the May 9 letter agreement from Republic’s trustee division, under the rubric acknowledgment and agreement, states:
3A—”The company by signing this agreement acknowledges and agrees that as of May 9, 2024 an EVENT OF DEFAULT has occurred and the noteholders are entitled to exercise their enforcement and other rights under the trust deed;”
3B (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.” (emphases added)
In its three page letter of May 9, therefore, Republic Bank uses the word ‘default’ once and derivations of that word on five more occasions:
* The phrase ‘has defaulted’ was used once with regard to Portland (Barbados) missing the April 30, 2024 bullet payment;
* The term ‘event of default’ was used on two occasions, regarding Portland (Barbados) not paying the US$23 million bullet payment by the close of business on May 9, 2024;
* The term ‘default rate’ was used twice to emphasize that Portland (Barbados) will have to pay the higher rates of interest during the repayment plan, including a rate of 10.25 per cent a year for the final payment in August.
* The word ‘default’ is used once to alert the company that should it not meet any of its payment obligations during the repayment plan, the interest rate for the remaining period goes to 12.25 a year.
Is it noteworthy that Republic Bank is prepared to charge Portland (Barbados) 12.25 per cent (the default rate), which is 4 per cent more than 8.25 per cent during the life of the note?
Is it noteworthy that the trustee uses the phrase ‘event of default’ on two occasions, including once when Mr Lee-Chin acknowledges and agrees that the fact he missed the May 9 grace period was an event of default?
May 14 letter again
After confirming that the May 9 letter agreement “contains an accurate recital of the fact in this matter,” the trustees went on to add this, “The noteholders have not decalred an EVENT OF DEFAULT and authorised enforcement actions as provided for under the trust deed.”
This is true. The noteholders held a virtual meeting on May 7 to determine their recourse in recovering monies owed to them by Portland (Barbados). Without having had sight of the trust deed for the US$23 million note, one would assume that the noteholders would need to hold another virtual meeting to declare an event of default. That has not happened as yet
But the May 9 letter is clear that the fact that the bullet payment was not paid on April 30, 2024, constitutes an event of default (See 2D above). And by signing the agreement, Mr Lee-Chin acknowledged and agreed that an event of default occurred as a result of his not paying the sum owed at the end of the seven-day grace period (See 3A above).
In the Jamaican online, business publication Our Today, a story headlined ‘Lee-Chin’s Portland was never in default of Trini bond.’ That story, written by he website’s administrator, Al Edwards, quoted from Republic’s May 14 letter and made the statement that “Portland (Barbados) was never in technical default and the noteholders repose the ultimate faith in Portland and Michael Lee-Chin.”
Mr Edwards, a former business editor at the Jamaica Observer, went on to state, “In fact, Republic Bank categorically refutes that Portland (Barbados) was ever in default and did not specify how the Guardian’s reporter could arrive at that conclusion.”
Mr Edwards clearly had not had sight of Republic Bank’s May 9 letter on this issue, in which default and its derivatives were used on six occasions.
By the way, “In finance, default is failure to meet the legal obligations (or conditions) of a loan, for example when a home buyer fails to make a mortgage payment, or when a corporation or government fails to pay a bond which has reached maturity.” That definition is from the Charles Schwab website.