NCB pressured to join mutiny on CL bond debt
Published:Wednesday | October 5, 2011 | 12:00 AM
Steven Jackson, Business Reporter
National Commercial Bank Jamaica is being pressured to side with other CL Spirits bondholders, who in a closed door meeting Monday opted to declare the debt in default and force CL Financial to put up Lascelles stock for sale to the highest bidder, according to a respected head of a Kingston brokerage.
NCB, Jamaica's largest bank, said last night that talks continue at different levels.
The bondholders need NCB to back their play because it is one of the largest holders of CL Spirits bond debt issued in Jamaica through its subsidiary NCB Capital Markets Limited.
Lascelles said earlier in the day it had no knowledge of the move, while Robin Levy, head of JCSD Trustee Services Limited, which represents bondholders, said he would not comment on the issue.
Minority bondholders, said one source, decided to play hardball after CL Financial Group proposed Monday to make a US$40 million payment or one-sixth of the US$240 million principal debt over an extended period ending December.
"This upset the noteholders," the source said. "So the ball is in NCB's court ... whether NCB is going to veto the decision of the small noteholders," said the source who explained that the noteholders required a larger counterpart to make their decision binding. NCB is one of the largest local noteholders at about US$62 million ($5.3 billion), according to the source who requested anonymity.
The noteholders include principals in the Black Sand Acquisition Group, which has made a hostile takeover bid for Lascelles at US$3.86 per share.
NCB last night acknowledged that it was being lobbied but said it had made no decision and that the situation remained fluid.
"We are continuing discussions with noteholders through the trustee," said spokeswoman Sheree Martin, the general manager of the Marketing, Communications and Service Delivery Division, after consultations with inhouse counsel Dave Garcia. Other queries sent to NCB head Patrick Hylton were unanswered.
Bondholders had expected that at least half of the US$40 million, which is in escrow, would have been paid out this month.
"People were expecting to be paid, but CL said they are not paying anything until December," said the source. They are pressing to have CL Financial give "notice that they are in default and want them to exercise the right to sell shares in Lascelles to the highest bidder," said the investment expert.
Payments always met
Lascelles, speaking for parent CL Financial, has denied reneging on the commitment (see other story on this page).
The US$40 million was to be the first real payment on the bond's principal which contributed to the downfall of the Trinidad-based CL group. CL is in default on a US$240 million bond used to finance its acquisition of Lascelles deMercado and Company Limited in 2008. Another tranche was issued in Trinidad, bringing the total to US$342 million. The bond's interest payments were always met by the CL Financial Group, which was taken over by the Trinidad government in January 2009.
In early Sep-tember, JCSD Trustee Services said it awaited notification on whether the sale of a Trinidad-based oil and gas subsidiary within the CL Financial Group last month would result in the payment to local bondholders.
Black Sand interests, which includes William McConnell and Jason Abrahams, were upset that Lascelles paid out a big dividend of J$3 billion that largely benefited 87 per cent owner CL Financial even as the CL Spirits debt languished.
In August, Jamaican bondholders offered CL Financial an extended deadline, to September, to determine a payment schedule for the bond.