Jamaica Gleaner / Eppley Limited, which mainly provides insurance premium financing, will float two preference stock as the first out of the blocks to fundraise on the market in the new year with issues that are priced to raise $800 million.
It will result in the company lowering the cost of debt from 9 per cent on average, to paying 8.75 per cent on the Jamaican dollar pref. Eppley will also float a US dollar pref for the first time, which will pay dividends at five per cent.
“The use of proceeds of this issue is mainly to redeem our 2019 preference shares early. However, we are also using the opportunity of going to market to partially fund Eppley’s near-term investment pipeline,” said Eppley Managing Director Nicholas Scott.
The offers includes 41.667 million units at $6, to raise $250 million; and 4.366 million units at US$1 to raise US$4.366 million, according to the prospectus issued on Wednesday.
Eppley, a member of the Musson Group, will have the option of upsizing the offer, if oversubscribed, to raise no more than $450 million and US$5.1 million, respectively.
Eppley previously revealed in a market notice that it would early redeem its 2019 preference shares on January 31. The market value of those shares is around $600 million.
The new offers – which are open to the market January 3-23 – will be Eppley’s fourth and fifth fundraising effort through the stock market, not counting its initial public offering of ordinary stock in 2013. The JMD prefs will receive a preferential dividend at a fixed rate of 8.75 per annum up to maturity in 2023; and five per cent per annum up to 2021 for the US dollar-denominated shares.
Since its market debut, Eppley’s investment portfolio, consisting of loans, leases and receivables, has more than doubled to its current level of $2.3 billion. The average income yield is 15 per cent.
Earlier this year the company, in partnership with NCB Capital Markets, launched the Caribbean Mezzanine Fund, the first credit and mezzanine fund focused on the Caribbean.
Through the fund, Eppley now co-manages an additional US$15.95 million of assets for investors.
“As you know, the Caribbean Mezzanine Fund itself is a private investment vehicle that we co-manage with NCB Capital Markets and as such we do not disclose its investments or its financial performance publicly. We can, however, report that we have made a number of investments in the fund’s first year and that both the pace of our investments and their performance so far is in line with our expectations,” Scott said.