Proceeds will be used to refinance maturing debt facilities

Durrant Pate/Contributor

VM Investments Limited (VMIL) is tapping the local capital market for J$5.43 billion in fresh capital to refinance its debt portfolio.

The company is floating to the public next week a 3-tranche unsecured corporate bond offer, which opens on December 19, 2024, and closes a week later on December 27 at 4:30 pm. The minimum subscription J$10,000 with Tranche D in the amount of J$1-billion with a term of 18 months and coupon rate of 9.75%; Tranche E, 2-billion with a term of 24 months and coupon rate of 10% and Tranche F with a coupon rate of 10.5% in the amount of $2.43 billion with a term of 36-months. 

These rates are fixed for the first two years and thereafter would be based on the 90-day Weighted Average Treasury Bill Yield (WATBY) plus a fixed margin of 2.0%. Initial investments above J$5 million will receive an 11.50% coupon % per annum for the first two years but thereafter interest would be based on the 90-day WATBY plus a fixed margin.

Interest payment will become due and payable three months after the Issue Date in December and thereafter each three-month period expiring on June 27, 2026, October 27, 2026, and October 27, 2027, provided that the last interest payment will be payable on the maturity date. VMIL intends to use the net proceeds of the offer to refinance maturing debt facilities and cover transaction costs.

The debt schedule indicates a total of $5.40 billion to be refinanced, which leaves $31.77 million to cover transaction costs. With this offer, VMIL is actively pursuing the strategic refinancing of its current debt facilities to bolster its financial health. By issuing new bonds to replace the existing ones, VMIL aims to extend the maturity dates of its current debt. This extension will afford the company enhanced financial flexibility by providing longer repayment periods.

Maintaining robust liquidity 

This adjustment ensures that VMIL can maintain robust liquidity effectively manage its cash flows, and pave the way for sustained future growth, through more acquisitions and private equity investments. VM Investments intends to apply to the Jamaica Stock Exchange for the bonds to be admitted to listing on its Bond Market within 21 days of the closing date of the offer.

Allotment of bonds in this public offer will be done on a “first come first served basis,” which means that they will be processed and allocated according to the order in which they are received. VMIL reserves the right to reject any subscription which might not meet the full requirements or to allocate bonds on an alternative basis, if oversubscribed. 

The broker and listing agent for the offer is VM Wealth Management. However, the company (in the event of oversubscription) reserves the right to allot Bonds on an alternative basis to be determined in its sole discretion including allotting a minimum of bonds to each applicant and then allocating the excess on a pro-rata basis or on such alternative basis as seems justifiable having regard to fairness and efficacy.