Durrant Pate/ Contributor

Jamaican financial powerhouse, NCB Financial Group (NCBFG), has reportedly pledged all of the shares of its majority-owned subsidiary, Guardian Holdings (GHL), as collateral for its delayed US$300 million bond.

The Trinidad and Tobago Guardian reports that the move, which is unprecedented in Caribbean corporate history, exposes GHL to additional risks if NCBFG does not meet its debt obligations. NCBFG has over US$250 million in debt obligations maturing this year. 

NCBFG owns 61.77 per cent of GHL’s ordinary shares. In order to pay off the maturing debt, NCBFG last week launched a senior unsecured bond that should have priced and closed in early June. 

Bond still not priced 

However, the offer was not priced, and investors remained puzzled by the silence from NCBFG. NCBFG updated the T&T Stock Exchange on Monday, revealing that the offer was now a senior secured bond and that an amended and restated offering memorandum was released. 

Our Today reported earlier this week that NCBFG expects the offer to price and close shortly. International ratings agency, Fitch, in giving its assessment of the planned capital raise, commented, “…in the event of the notes’ default, available mechanisms allow the use of collateral and the related proceeds to repay the notes. As a result, our rating on the proposed notes remains at the same level as the issuer credit rating, given the notes’ seniority.” 

The memorandum explained that NCBFG would pledge all of its 143,326,379 shares held in GHL as collateral for the bond. However, 127,873,515 GHL shares are already pledged for US$166.76 million worth of debt. 

The T&T Guardian spoke with GHL chief executive Ian Chinapoo, who confirmed that the GHL debt that is being paid off by some of the proceeds of the NCBFG bond totalled US$173.51 million. GHL subsidiary, Guardian Life Ltd (GLL) purchased the insurance and annuity business of NCB Insurance Agency and Fund Managers in September 2020 for J$4.90 billion. 

Our Today also reported earlier this week that GLL will now purchase the pension fund management portfolio from NCB Insurance Agency under a planned internal reorganisation.