Apr 2004 Financial News

AIC, First Caribbean clinch mega-deal with Courts

Apr 14, 2004

The Trinidad branch of Michael Lee Chin's AIC Financial Group and the Barbados-based First Caribbean International Bank have been awarded the mega-deal to securitise Courts' regional hire purchase receivable, and list the entity that will emerge from the merger of the furniture retailer's regional operations.

"Yes, we have been jointly mandated to do all of the Courts transactions," confirmed Keith King, AIC's group CEO and managing director, yesterday. "We will handle it 50:50 with First Caribbean."

"It would be the largest securitisation deal in the region," added King, who up until February, headed the merchant banking subsidiary of the region's largest listed company, RBTT Financial.

King was poached by Lee Chin from RBTT to run his AIC Financial Group in the twin-island republic.

The Business Observer was unable to ascertain the size of the combined hire purchase portfolio of Courts' regional operation before press time last night. However industry sources described the deal as a huge business for both financial institutions.

Courts, which has 11 operations throughout the region, has a hire purchase receivable of more than $5 billion, due over the next two to three years, in Jamaica alone.

Under the deal, the two financial institutions will pay Courts for the receivable, and the retailer will, in all likelihood, remain as collecting agents for the debt. Historically, Courts has a very low (below three per cent) delinquency rate among its hire purchase customers.

The listing of the new entity to replace the multiple listings of the various operations in the region was first reported by the Business Observer late last year. That is expected to take place by August.

The regional branches will be apprised on April 26 of how their UK parent company - Courts PLC - plans to proceed with the restructuring, our sources say.

In 2003, the Caribbean contributed £181 million of Courts' total group sales of £637 million - ahead of South East Asia which contributed £160 million.

Courts operates stores in 11 Caribbean countries, including Jamaica, Barbados, Trinidad & Tobago, Belize, Antigua, St Lucia, Dominica, Grenada, Guyana, St Kitts, and St Vincent.

Yesterday, King declined to give further details of what the deal for AIC and First Caribbean would involve, except to confirm that both financial institutions would also be handling the securitisation of Courts' significant hire purchase receivable portfolio, in addition to the listing of the new regional entity.

Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20040414T000000-0500_58473_OBS_AIC__FIRST_CARIBBEAN_CLINCH_MEGA_DEAL_WITH_COURTS.asp