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'I have never been under house arrest'
Will honour bondholders come November - Lee Chin
By Al Edwards
Friday, September 25, 2009
For the better part of this week, persistent speculation that AIC boss and chairman of NCB Michael Lee Chin had been placed under house arrest has gone through both the Canadian and local business communities like a lightning rod.
Speaking with Caribbean Business Report from NCB's corporate headquarters on Trafalgar Road in Kingston, Lee-Chin sought to address this issue and did so in a forthright manner.
"In August 2008, we opened the Northern Caribbean University School of Nursing, donating J$250 million to have it built and right now there are 800 nursing students being trained. I am absolutely sure that none of these 800 students perpetrated this rumour.
I am also sure that no one from Port Antonio who has been the beneficiary of our largesse started this rumour, come to think of it I don't know who started it, but I do know who is not involved in it. I have never been placed under house arrest in Canada nor Jamaica nor anywhere for that matter.
Placing value on a reputation
"Throughout my life I have placed great value on my reputation. I went to university in Canada and my professional life has been in Canada. Early in my career when I was unknown but successful, people would say, 'he's Jamaican, he drives a Mercedes so he must be selling drugs'.
I have always been dogged by silly rumours. I have to keep focused on what I am all about. At the end of the day I want to have fulfilment in my life and that comes from two things - doing well for my family and doing good for society.
Whatever people want to say is just water off a duck's back to me. I have been blessed, I have been fortunate and used my opportunities in a way that no one on Earth can say I cheated them. My reputation is foremost.
I have been focused on building my reputation and stoking it everyday. That means I have done everything to make it burnished and nothing to make it tarnished," declared the chairman of NCB.
It has been said that efforts to denigrate Lee Chin's character and reputation come from people who are eager to acquire NCB and that there is a concerted effort to ensure that he is unable to honour his bondholders come November, making many of his assets easy to be snapped up at knock down prices.
Having missed a June deadline this year to make good on paying out US$155 million to bondholders of AIC (Barbados), Lee Chin's Caribbean holding company, he was able to secure an extension until November 27.
Interest on the bonds to November has been set at 13.25 per cent with around US$109 million in AIC bonds at stake with US$60 million maturing this year.
The remainder matures between January 2010 and April 2011. Lee Chin's Caribbean operations have been hit by the global financial crisis, falling net worth and a cash crunch.
To make good on his promise, he sought a buyer for his 20 per cent stake in Columbus Communications, a Caribbean-wide fibre optic cable company which is the parent of Flow. This, it was believed, would fetch him around US$250 million. To date he has been unable to ascertain a buyer.
Last week, CBR reported that Lee Chin sold another five per cent stake in NCB this year, reducing his ownership to just over 62 per cent. The majority of these shares were snapped up by Stocks and Securities Limited (SSL).
Lee Chin bought a 75 per cent stake in NCB back in 2002 for US$127 million, of which US$56 million was made as a downpayment. Last year, the bank made a profit of the equivalent of US$66 million.
Since acquiring NCB, Lee Chin's associated companies have sold off around 360 million shares, or 14.6 per cent of Jamaica's largest indigenous bank.
Noteholders will be satisfied
The question is, will he be able to make good to bondholders come November?
"Last Friday, I closed the sale of AIC's Canadian mutual fund business to Manulife. That was my plan B," said Lee Chin. "November will come and I will be in a position to honour all the bondholders, I always have a plan B and I always honour my commitments," said Lee-Chin.
Last month, Lee Chin announced that he was selling AIC Limited's Canadian retail investment fund arm to insurance giant Manulife Financial. Under the agreement, Manulife Mutual Funds will manage all AIC funds in Canada and AIC would continue to act as a fund sub-advisor for Manulife Mutual Funds.
This deal means that Manulife Financial, Canada's largest life insurance company, will have about Cdn$13.7 billion of assets under management in the retail mutual fund business which will boost its Canadian mutual fund business by about 38 per cent.
Manulife has operations in 22 countries and as at June 30, 2009, had funds under management of Cdn$421 billion.
Commenting on the Manulife deal, Lee-Chin said: "Owning a private company means you do not have liquidity in shares, so I transferred the ownership of AIC and I got ownership of Manulife - which is the third largest insurance company in the world, and the largest insurance company in Canada. We are now the largest individual shareholder of Manulife worldwide which gives us liquidity through the ownership of Manulife stock.
"In effect, we gave up what was illiquid, got what was liquid and Manulife asked us to continue to manage Cdn$2.5 billion of their assets. I still manage the Advantage Fund. I think that's a very good deal, don't you?"
Addressing the question of satisfying AIC (Barbados) bondholders, Lee Chin said that they are fully collateralised by his shares in NCB and Columbus Communications, making them in fact over-collateralised.
"The interest that the bondholders are getting is premium. We are now in the process of selling some
of our stake in Columbus Communications. Selling part of AIC was never part of the obligation, in my mind it was merely plan B. What we are doing is monetising our interest in Columbus."
No longer selling CVM
Earlier this year, Lee Chin's media interest, CVM-TV, was up for sale with an asking price of around US$8 million. This would no doubt go some way to help make good on payments to bondholders.
There were a number of bidders, but none able to come up with the asking price. So what is the position now?
"The winter of 2008 spelt bad times for the global economy and no one knew what the future looked like.
At that point in time, given the fact that I had the pressure of noteholders, I would have sold assets just to make good on my commitments. Now, with things becoming more clear, assets like CVM will now be retained. I am no longer interested in selling CVM.
It is a fantastic asset because, though it will not make oodles of money, due to the limited nature of the advertising market in Jamaica, it will be an integral part of the mission, which is to build a better Jamaica.
It will help to recalibrate our standards, because that's a problem we have in Jamaica, what do we expect of ourselves and the country. We have to completely overhaul those expectations, and CVM is a good vessel for building a better Jamaica and for that reason I am going to keep it."
Medical Associates at a break-even situation
Back in the summer of 2006, Lee Chin acquired a 67 per cent share in Jamaican privately held hospital Medical Associates for $65 million. At the time, Medical Associates was carrying $350 million in debt and needed capital to modernise its facilities. Lee Chin stepped in as a white knight and has tried to turn
the Kingston-based hospital around. Has he succeeded yet?
"Medical Associates is now at a break-even situation," he said. "Given the issues that we had, it was not an irritant to us, so we really have not put any focus on it. But once our liquidity situation improves, which it will, we will be looking to further develop Medical Associates and make it a state-of-the-art medical facility that Jamaica can be proud of."
Turning around Advantage General Insurance
In 2006, Lee Chin's AIC group acquired an 80 per cent stake in Neville Blythe's highly leveraged United General Insurance (UGI) which, at the time, was reporting huge loses though it remained the leader in the motor vehicle insurance market.
Lee Chin sought to diversify its product offering and strengthen the company's management capabilities. To that end, he brought in Mark Thompson from Cable & Wireless Jamaica to steer the company through choppy waters and rebranded UGI as Advantage General Insurance (AGI).
"AGI has been a turnaround success story similar to NCB," he said. "When we took over AGI three years ago it had a bad reputation for not paying out claims.
Today, it has a very good reputation for paying claims. When we came in, we discovered a demoralised staff complement and we were forced to lay off people. But today we have a very motivated staff.
"In those early days we also inherited a very derelict IT back-office infrastructure. Today, it is state-of-the-art. Management has grown. When we took it over, the company had lost US$5 million, last year it made US$8 million profit and this year it will make over US$10 million. Today, we take five per cent of AGI's profit and invest it in our philanthropic efforts."
Trident back on
Lee Chin, who is from Port Antonio, ventured into tourism, buying Port Antonio's Trident Villas and Spa, as well as Trident Castle. Development began in earnest but due to cash constraints and more pressing matters, the development of the project was suspended.
Updating CBR on the development, Lee Chin said: "On Tuesday of this week I met with Marvin Goodman, together with Richard and Michael Todd of Prime Construction, who are the contractors on the project which is 85 per cent completed, and the intention is to get Trident back on track by early next year.
We have to take an inventory of what has to be done so as to determine how we proceed."
Will honour bondholders come November - Lee Chin
By Al Edwards
Friday, September 25, 2009
For the better part of this week, persistent speculation that AIC boss and chairman of NCB Michael Lee Chin had been placed under house arrest has gone through both the Canadian and local business communities like a lightning rod.
Speaking with Caribbean Business Report from NCB's corporate headquarters on Trafalgar Road in Kingston, Lee-Chin sought to address this issue and did so in a forthright manner.
"In August 2008, we opened the Northern Caribbean University School of Nursing, donating J$250 million to have it built and right now there are 800 nursing students being trained. I am absolutely sure that none of these 800 students perpetrated this rumour.
I am also sure that no one from Port Antonio who has been the beneficiary of our largesse started this rumour, come to think of it I don't know who started it, but I do know who is not involved in it. I have never been placed under house arrest in Canada nor Jamaica nor anywhere for that matter.
Placing value on a reputation
"Throughout my life I have placed great value on my reputation. I went to university in Canada and my professional life has been in Canada. Early in my career when I was unknown but successful, people would say, 'he's Jamaican, he drives a Mercedes so he must be selling drugs'.
I have always been dogged by silly rumours. I have to keep focused on what I am all about. At the end of the day I want to have fulfilment in my life and that comes from two things - doing well for my family and doing good for society.
Whatever people want to say is just water off a duck's back to me. I have been blessed, I have been fortunate and used my opportunities in a way that no one on Earth can say I cheated them. My reputation is foremost.
I have been focused on building my reputation and stoking it everyday. That means I have done everything to make it burnished and nothing to make it tarnished," declared the chairman of NCB.
It has been said that efforts to denigrate Lee Chin's character and reputation come from people who are eager to acquire NCB and that there is a concerted effort to ensure that he is unable to honour his bondholders come November, making many of his assets easy to be snapped up at knock down prices.
Having missed a June deadline this year to make good on paying out US$155 million to bondholders of AIC (Barbados), Lee Chin's Caribbean holding company, he was able to secure an extension until November 27.
Interest on the bonds to November has been set at 13.25 per cent with around US$109 million in AIC bonds at stake with US$60 million maturing this year.
The remainder matures between January 2010 and April 2011. Lee Chin's Caribbean operations have been hit by the global financial crisis, falling net worth and a cash crunch.
To make good on his promise, he sought a buyer for his 20 per cent stake in Columbus Communications, a Caribbean-wide fibre optic cable company which is the parent of Flow. This, it was believed, would fetch him around US$250 million. To date he has been unable to ascertain a buyer.
Last week, CBR reported that Lee Chin sold another five per cent stake in NCB this year, reducing his ownership to just over 62 per cent. The majority of these shares were snapped up by Stocks and Securities Limited (SSL).
Lee Chin bought a 75 per cent stake in NCB back in 2002 for US$127 million, of which US$56 million was made as a downpayment. Last year, the bank made a profit of the equivalent of US$66 million.
Since acquiring NCB, Lee Chin's associated companies have sold off around 360 million shares, or 14.6 per cent of Jamaica's largest indigenous bank.
Noteholders will be satisfied
The question is, will he be able to make good to bondholders come November?
"Last Friday, I closed the sale of AIC's Canadian mutual fund business to Manulife. That was my plan B," said Lee Chin. "November will come and I will be in a position to honour all the bondholders, I always have a plan B and I always honour my commitments," said Lee-Chin.
Last month, Lee Chin announced that he was selling AIC Limited's Canadian retail investment fund arm to insurance giant Manulife Financial. Under the agreement, Manulife Mutual Funds will manage all AIC funds in Canada and AIC would continue to act as a fund sub-advisor for Manulife Mutual Funds.
This deal means that Manulife Financial, Canada's largest life insurance company, will have about Cdn$13.7 billion of assets under management in the retail mutual fund business which will boost its Canadian mutual fund business by about 38 per cent.
Manulife has operations in 22 countries and as at June 30, 2009, had funds under management of Cdn$421 billion.
Commenting on the Manulife deal, Lee-Chin said: "Owning a private company means you do not have liquidity in shares, so I transferred the ownership of AIC and I got ownership of Manulife - which is the third largest insurance company in the world, and the largest insurance company in Canada. We are now the largest individual shareholder of Manulife worldwide which gives us liquidity through the ownership of Manulife stock.
"In effect, we gave up what was illiquid, got what was liquid and Manulife asked us to continue to manage Cdn$2.5 billion of their assets. I still manage the Advantage Fund. I think that's a very good deal, don't you?"
Addressing the question of satisfying AIC (Barbados) bondholders, Lee Chin said that they are fully collateralised by his shares in NCB and Columbus Communications, making them in fact over-collateralised.
"The interest that the bondholders are getting is premium. We are now in the process of selling some
of our stake in Columbus Communications. Selling part of AIC was never part of the obligation, in my mind it was merely plan B. What we are doing is monetising our interest in Columbus."
No longer selling CVM
Earlier this year, Lee Chin's media interest, CVM-TV, was up for sale with an asking price of around US$8 million. This would no doubt go some way to help make good on payments to bondholders.
There were a number of bidders, but none able to come up with the asking price. So what is the position now?
"The winter of 2008 spelt bad times for the global economy and no one knew what the future looked like.
At that point in time, given the fact that I had the pressure of noteholders, I would have sold assets just to make good on my commitments. Now, with things becoming more clear, assets like CVM will now be retained. I am no longer interested in selling CVM.
It is a fantastic asset because, though it will not make oodles of money, due to the limited nature of the advertising market in Jamaica, it will be an integral part of the mission, which is to build a better Jamaica.
It will help to recalibrate our standards, because that's a problem we have in Jamaica, what do we expect of ourselves and the country. We have to completely overhaul those expectations, and CVM is a good vessel for building a better Jamaica and for that reason I am going to keep it."
Medical Associates at a break-even situation
Back in the summer of 2006, Lee Chin acquired a 67 per cent share in Jamaican privately held hospital Medical Associates for $65 million. At the time, Medical Associates was carrying $350 million in debt and needed capital to modernise its facilities. Lee Chin stepped in as a white knight and has tried to turn
the Kingston-based hospital around. Has he succeeded yet?
"Medical Associates is now at a break-even situation," he said. "Given the issues that we had, it was not an irritant to us, so we really have not put any focus on it. But once our liquidity situation improves, which it will, we will be looking to further develop Medical Associates and make it a state-of-the-art medical facility that Jamaica can be proud of."
Turning around Advantage General Insurance
In 2006, Lee Chin's AIC group acquired an 80 per cent stake in Neville Blythe's highly leveraged United General Insurance (UGI) which, at the time, was reporting huge loses though it remained the leader in the motor vehicle insurance market.
Lee Chin sought to diversify its product offering and strengthen the company's management capabilities. To that end, he brought in Mark Thompson from Cable & Wireless Jamaica to steer the company through choppy waters and rebranded UGI as Advantage General Insurance (AGI).
"AGI has been a turnaround success story similar to NCB," he said. "When we took over AGI three years ago it had a bad reputation for not paying out claims.
Today, it has a very good reputation for paying claims. When we came in, we discovered a demoralised staff complement and we were forced to lay off people. But today we have a very motivated staff.
"In those early days we also inherited a very derelict IT back-office infrastructure. Today, it is state-of-the-art. Management has grown. When we took it over, the company had lost US$5 million, last year it made US$8 million profit and this year it will make over US$10 million. Today, we take five per cent of AGI's profit and invest it in our philanthropic efforts."
Trident back on
Lee Chin, who is from Port Antonio, ventured into tourism, buying Port Antonio's Trident Villas and Spa, as well as Trident Castle. Development began in earnest but due to cash constraints and more pressing matters, the development of the project was suspended.
Updating CBR on the development, Lee Chin said: "On Tuesday of this week I met with Marvin Goodman, together with Richard and Michael Todd of Prime Construction, who are the contractors on the project which is 85 per cent completed, and the intention is to get Trident back on track by early next year.
We have to take an inventory of what has to be done so as to determine how we proceed."
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