NCB says Palmyra debt 'more than secure', as NPLs climb

National Commercial Bank says it expects to make no losses on the Palmyra financing deal that it arranged more than three years ago, saying that the loans were backed by "more than enough" security and that there were other parties to the debenture.

But the banking group was not as willing to speak of the impact of the failed US$88-million debt deal on its planned initial public offering in New York because of timing.

"We are unable to comment on the IPO at this stage as we are in a quiet period," said NCB group General Manager of Marketing and Service Delivery, Sheree Martin.

Quiet period is industry-speak for a 40- to 90-day period in which an issuer of capital is barred by the US Securities Exchange Commission from commenting on the offer. But it normally refers to promotional activity.

NCB is seeking to raise US$175 million through the New York Stock Exchange.

Martin said that NCB's balance sheet was strong and the bank profitable enough to deal with any fallout from Palmyra.

NCB is the biggest bank by capital, profit and assets. Its non-performing loan portfolio has climbed to 7.3 per cent as at the end of June, but Martin said that is an improvement from the 7.4 per cent recorded in March.

Participants in the US$88-million financing deal included NCB, NCB Capital Markets Limited, RBTT Jamaica and RBTT Trinidad, according to Companies Office records. NCB Capital Market's involvement was said to be limited to acting for individual and institutional bondholders, the Financial Gleaner learned.

RBTT Bank Jamaica, now RBC Royal Bank Jamaica, separately loaned Palmyra another US$22 million. On that Companies Office document, the borrowers were listed as Sanctuary Systems Limited incorporated in Jamaica, and Caribbean Green Power Systems Limited registered in St Lucia. The operational base of both was listed as Rose Hall, Montego Bay.

The banks took over the development on the weekend and put receiver Ken Tomlinson in charge.

Robert Trotta, chairman of Resort Properties Group, the developers of Palmyra Resort and Spa, confirmed the takeover of the incomplete condo hotel development on Wednesday, but signalled that he and others investors - who together had pumped equity of US$100 million into the resort project, he said - hoped to regain control.

"We sincerely regret that our financial partners NCB and RBTT have taken this step, but are hopeful of a positive outcome for the homeowners as the main constituents of the Palmyra Resort and Spa," he said.

"The Palmyra ownership group is collaborating with the receiver and financial institutions in order to exit out of receivership."

Trotta said the property would continue operating as normal as he sought to assure individual owners of units already sold.

Tomlinson has brought in former hotel executive Sam James to run the property in receivership.

Trotta said he regretted that RBTT/RBC and NCB opted to call in their chips.

"After submitting to the banks numerous plans substantiated by significant equity investment, Royal Bank of Canada (RBC) and National Commercial Bank (NCB) have decided to demand payback of the principal on their facilities with immediate effect," he said.

"We sincerely regret that our financial partners NCB and RBTT have taken this step, but are hopeful of a positive outcome for the homeowners as the main constituents of the Palmyra Resort and Spa."

The Palmyra complex comprises three towers, two of which have been completed. The development has been ongoing since 2005.

business@gleanerjm.com