Express Catering hunts US$12M
EXPRESS Catering Limited (ECL) will be going to the bond market as it seeks to raise up to US$12 million ($1.86 billion) which will assist in refinancing existing debt and in financing greater growth objectives.
The airport food and beverage concessionaire will be seeking to raise a minimum of US$10 million, with an option to upsize the senior unsecured bond offer to US$12 million. About US$8.5 million will be used to repay a loan from Sygnus Credit Investments Limited (SCI) which is due by December 2025, with the remaining proceeds to be used to complete the buildout of the food court at Sangster International Airport.
“The outlook for the remainder of fiscal year 2024 is buoyant. The winter tourist season is now on in earnest [and] the early indicators are very positive and in line with the pronouncements from the Ministry of Tourism and its affiliated entities — the Jamaica Tourist Board and the Jamaica Hotel and Tourist Association (JHTA). The company is poised to record its best year to date in passengers accessing the post-security lounge as well as top-line revenue. The company continues to work on realigning its entire cost structure,” stated the ECL prospectus.
The company’s current loan with Sygnus Credit Investments is composed of eight per cent (which is paid on an ongoing basis), plus four per cent which is deferred quarterly and payable at maturity — which adds up to 12 per cent in interest rates. The ECL bond will be offered at a fixed interest rate of 8.50 per cent that will be payable quarterly, with the bond to mature in 2027. The first interest payment will be made on May 30, with subsequent payments to be made on August 30, November 30 and February 28.
By refinancing the SCI loan at the rate put forward the company’s current interest expense will be cut, which will give it the additional fiscal space to complete its expansion plans. ECL opened Bob Marley’s One Love Experience in July 2023 and will be opening a smoking lounge, Freshens and Bento Sushi, in 2024. The opening of the last two brands is set to cost about US$1.2 million.
ECL is also looking to become a food and beverage concessionaire at other local airports and those in the Caribbean region. This will be complemented by bringing some of the licensed brands like Auntie Anne’s and Cinnabon to the general public. These plans will be tested at the arrivals area in 2024 before being pushed islandwide.
ECL added Charmaine Maragh to its board on November 13 before appointing her, along with Professor Andrew Spencer, to the audit and remuneration committees on January 18.
ECL’S second-quarter report revealed that its revenue grew 23 per cent to US$5.18 million, with net profit climbing 47 per cent to US$187,240. For the overall six months, revenue increased 27 per cent to US$11.58 million with net profit rising 32 per cent to US$1.03 million.
ECL’S total assets grew five per cent to US$44.16 million, with the bulk of it being a current asset of related party balances. Total liabilities and shareholders’ equity were US$37.09 million and US$7.07 million, respectively.
The minimum amount to subscribe to the bond is US$100, with subsequent increments to be done in US$100 multiples. The processing fee per application is US$2, with the overall offer expected to cost US$304,000 in fees. The offer will open on February 9 and close by March 8. Express Catering also plans to list the bond on Jamaica Stock Exchange’s (JSE) Bond Market, which would make it the first USD bond if it is admitted to trading.
Mayberry Investments Limited is the lead broker while Sygnus Capital Limited is the co-broker for the offer. Sygnus Capital and Scotia Investments Jamaica Limited are the listed selling agents but Mayberry Investments Senior Vice-president Dan Theoc mentioned last Friday that VM Wealth Management, NCB Capital Markets Limited, and JMMB Securities Limited should be added as selling agents later. Investors can visit successwithexpressja.com to learn more about the offer.