The Gleaner: KINGSTON, Jamaica, By Tanesha Mundle – A legal battle is under way between business mogul Michael Lee-Chin-led AIC Barbados Limited and Medical Associates Limited over a million worth of shares that were to be transferred to the Caribbean company under a multimillion-dollar loan agreement but were reportedly not delivered.
The legal challenge initiated by AIC against the holding company for Medical Associates Hospital and Medical Centre follows an announcement last month in the Financial Gleaner that a consortium, Caribbean Health Systems Limited (CHS), had taken over ownership of the privately owned St Andrew hospital in an $800,000 million takeover bid.
CHS is a Jamaican-owned but St Lucian-registered company in which Dr David Walcott, Ryan Reid, Douglas Halsall, Dr Michael Banbury, Kevin Donaldson and Kirk-Anthony Hamilton are partners through their respective companies, First Rock Real Estate Investment, Novamed and Health Ventures Limited.
AIC was brought in as an investor after the hospital encountered financial difficulties in 2002, due to financial irregularities.
An agreement was subsequently reached for the Caribbean investor to lend $65 million to Medical Associates Limited, subject to the hospital offering it a significant amount of shares, and in 2006, both parties entered into heads of agreement followed by a share subscription agreement in 2007.
The heads of agreement provided for two loans from AIC, secured by promissory notes, ‘which shall be convertible’ into 1,050,000 fully paid-up ordinary shares of $61.88 each of Medical Associates Limited and issued to AIC, or its nominee, representing 67 percent of the issued and fully paid-up share capital.
AIC was to get 404,000 shares in exchange for $25 million, which was to be paid to Medical Associates Limited, and a further 646,000 shares for the additional $40 million.
Another $110 million was to be provided to finance further developments at the hospital.
AIC has now initiated a claim against Medical Associates Limited to have the shares handed over.
In the lawsuit filed this year, AIC sought orders and declarations including that there be specific performance of the heads of agreement and that Medical Associates Limited do all such acts and execute all such documents as may be necessary to issue the 1,050,000 new ordinary shares or such numbers of new ordinary shares as shall upon issue, represent 67 per cent.
AIC is also seeking damages in addition to or in lieu of the specific performance.
DISCLOSURE OF RECENT SALE
Additionally, the company is seeking disclosure about the recent sale of the hospital via a temporary injunction application.
The injunction hearing was scheduled for Friday in the Supreme Court but was postponed to May 5.
AIC is being represented by the law firm Nunes, Scholefield, DeLeon & Company.
Medical Associates is currently a 24-bed facility that the new owners plan to double within a year to 18 months.
The size of the capital expenditure to upgrade the facility is still being determined, but the information will be released once the budget has been finalised, Donaldson had shared with the Financial Gleaner.
Medical Associates Limited has been dogged by legal challenges over shares in the company over the years.
In 2015, Medical Associates’ former management company, Community Medical Services (CMS), sued it over 400,000 shares that it had transferred to the holding company to secure part of the loan received from AIC Barbados Limited to finance further developments at the hospital.
CMS contended that the person who transferred the shares to Medical Associates Limited did not have the authority to do so and that it was still the legal and beneficial owner.
However, Medical Associates Limited triumphed, after the Supreme Court, in a summary judgment in 2018, found that CMS had agreed to donate the shares and that they were properly transferred to Medical Associates.
CMS, through its lawyer, Donovan Malcolm, had indicated that it had filed an appeal against the judgment. Efforts to ascertain what had become of that appeal were unsuccessful.
In the meantime, a source had previously informed the Financial Gleaner that the share ownership issue and any outstanding debt were covered in the takeover bid.