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Cash Plus converting from investment club - Asks lenders to roll over funds for 3 months
published: Sunday | December 30, 2007
Carlos Hill, chairman of Cash Plus Group, wants his clients to hold off collecting interest payments to allow the group to restructure. - File
Faced with jittery investors, Carlos Hill's controversial Cash Plus Group says it will transform itself from mainly a financial operation to a multifaceted conglomerate.
"[We] ... have begun to strategically reclassify the group to ensure the continued long-term development, growth and success of the company," Cash Plus says in an advertisement appearing in newspapers today.
"The effectiveness of this new strategy is contingent on time."
In that regard, Cash Plus urged its clients to "roll over their monthly consideration for a period of up to three months", allowing it space "to regularise its operations not as a financial entity, but as a profitable conglomerate of companies with diverse operations, without any risk to our clients."
The revamped business is to focus on telecommunications, real estate development, food distribution, and hospitality.
Cease-and-desist order
It was not immediately clear how the cease-and-desist order issued by the Financial Services Commission (FSC) on Cash Plus late Friday would affect its move to reclassify its operation.
The order was against Cash Plus Limited and its principals, directors, officers, and employees, as well as Carlos O. Hill, and Kahlil Harris.
The FSC cited breaches of sections 7 and 10 of the Securities Act, as well as Section 26, saying "the securities they offer to the public have been issued without them first being registered by the FSC".
Cash Plus just this month announced a hold on disbursements to clients until January, saying it was revamping its payment system.
Anxious clients have been flooding its offices since.
Operating for five years
The company has operated in Jamaica for the past five years, taking 'investments' from lenders on the promise of returns of upwards of 120 per cent a year.
It has also, particularly over the past year, announced a flurry of investments in real estate and other ventures, but it is unclear how many of these have been finalised.
The company's unaudited accounts published a week ago suggest Cash Plus has interest liabilities to clients over the next three years of nearly $23 billion.
The data also suggest that the company has assets of $23 billion and shareholders' equity of $14.7 billion.
But the company is also short on working capital. Its short-term debts exceed current assets by $28.2 million. Expressed in another way, if Cash Plus were to convert its liquid assets to cash to pay off debts that are due within a year, it would still be short $28 million - suggesting it is facing a cash crunch.
Hill's organisation has been in a bitter tussle with the FSC, whose regulatory authority it has resisted, insisting that it was not in the business of trading securities.
In fact, Cash Plus, one of several so-called alternative investment schemes that have mushroomed in Jamaica in recent years, has gone to court seeking a declaration on whether it would be properly regulated by the FSC or the Bank of Jamaica.
Analysts have suggested, though, that its position would have been weakened by a Christmas Eve court ruling against Olint, the foreign-exchange trading club, which too, had insisted that it could not be regulated by the FSC.
History of finance fraud
Among Cash Plus' other recent troubles have been the revelation that its founder, Hill, went to jail in the United States for finance fraud, and a move by commercial banks to close the accounts of various entities on the grounds that they had failed to provide adequate information on the operations in accordance with the laws against money laundering.
Hill and his spokesmen have blamed the action of the banks for its difficulties in making payments to investors.
Cash Plus has an injunction against one bank - National Commercial Bank - preventing the shutdown of the accounts.
Payment mix-up
Investors have formed queues at its offices and have mostly received explanations for mix-ups over payment dates and requests for deferment of withdrawals.
Today's ad brings a level of formality to the plea.
The three-month rollover, Cash Plus said, would allow time for the amalgamation of the companies and to "optimise the potential of the companies within the group".
Says the Cash Plus ad: "We will not only give clients a stake in the company equivalent to the amount of their loan, but also a first lien against the assets of the consolidated Cash Plus Group. We are very advanced in achieving this objective." The company promised to contact clients with specifics and the benefits of the deal.
business@gleanerjm.com
published: Sunday | December 30, 2007
Carlos Hill, chairman of Cash Plus Group, wants his clients to hold off collecting interest payments to allow the group to restructure. - File
Faced with jittery investors, Carlos Hill's controversial Cash Plus Group says it will transform itself from mainly a financial operation to a multifaceted conglomerate.
"[We] ... have begun to strategically reclassify the group to ensure the continued long-term development, growth and success of the company," Cash Plus says in an advertisement appearing in newspapers today.
"The effectiveness of this new strategy is contingent on time."
In that regard, Cash Plus urged its clients to "roll over their monthly consideration for a period of up to three months", allowing it space "to regularise its operations not as a financial entity, but as a profitable conglomerate of companies with diverse operations, without any risk to our clients."
The revamped business is to focus on telecommunications, real estate development, food distribution, and hospitality.
Cease-and-desist order
It was not immediately clear how the cease-and-desist order issued by the Financial Services Commission (FSC) on Cash Plus late Friday would affect its move to reclassify its operation.
The order was against Cash Plus Limited and its principals, directors, officers, and employees, as well as Carlos O. Hill, and Kahlil Harris.
The FSC cited breaches of sections 7 and 10 of the Securities Act, as well as Section 26, saying "the securities they offer to the public have been issued without them first being registered by the FSC".
Cash Plus just this month announced a hold on disbursements to clients until January, saying it was revamping its payment system.
Anxious clients have been flooding its offices since.
Operating for five years
The company has operated in Jamaica for the past five years, taking 'investments' from lenders on the promise of returns of upwards of 120 per cent a year.
It has also, particularly over the past year, announced a flurry of investments in real estate and other ventures, but it is unclear how many of these have been finalised.
The company's unaudited accounts published a week ago suggest Cash Plus has interest liabilities to clients over the next three years of nearly $23 billion.
The data also suggest that the company has assets of $23 billion and shareholders' equity of $14.7 billion.
But the company is also short on working capital. Its short-term debts exceed current assets by $28.2 million. Expressed in another way, if Cash Plus were to convert its liquid assets to cash to pay off debts that are due within a year, it would still be short $28 million - suggesting it is facing a cash crunch.
Hill's organisation has been in a bitter tussle with the FSC, whose regulatory authority it has resisted, insisting that it was not in the business of trading securities.
In fact, Cash Plus, one of several so-called alternative investment schemes that have mushroomed in Jamaica in recent years, has gone to court seeking a declaration on whether it would be properly regulated by the FSC or the Bank of Jamaica.
Analysts have suggested, though, that its position would have been weakened by a Christmas Eve court ruling against Olint, the foreign-exchange trading club, which too, had insisted that it could not be regulated by the FSC.
History of finance fraud
Among Cash Plus' other recent troubles have been the revelation that its founder, Hill, went to jail in the United States for finance fraud, and a move by commercial banks to close the accounts of various entities on the grounds that they had failed to provide adequate information on the operations in accordance with the laws against money laundering.
Hill and his spokesmen have blamed the action of the banks for its difficulties in making payments to investors.
Cash Plus has an injunction against one bank - National Commercial Bank - preventing the shutdown of the accounts.
Payment mix-up
Investors have formed queues at its offices and have mostly received explanations for mix-ups over payment dates and requests for deferment of withdrawals.
Today's ad brings a level of formality to the plea.
The three-month rollover, Cash Plus said, would allow time for the amalgamation of the companies and to "optimise the potential of the companies within the group".
Says the Cash Plus ad: "We will not only give clients a stake in the company equivalent to the amount of their loan, but also a first lien against the assets of the consolidated Cash Plus Group. We are very advanced in achieving this objective." The company promised to contact clients with specifics and the benefits of the deal.
business@gleanerjm.com
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