Express bond to fund growth
EXPRESS CATERING Limited (ECL) will seek to raise up to US$12 million (J$1.8 billion) in a bond offer which will fund the completion of its new stores at the Sangster International Airport (SIA).
The company already runs several restaurants in the SIA, but the funds will allow it to add about seven new stores, totalling 31.
Mayberry Investments, the lead broker and arranger, intends to list the bond on the Jamaica Stock Exchange (JSE) bond trading platform.
The bond will offer investors 8.5 per cent annual interest over its tenor of three years. It is a similar interest as an existing debt with Sygnus Credit, even though secured years earlier. ECL intends to use the proceeds to repay existing indebtedness, and for capital expenditure.
“More specifically the company will repay US$8.5 million owing to Sygnus Credit Investments Limited and the capital expenditure will be used to complete the build-out of the food court,” according to the prospectus. “The company will also pay the expenses associated with the Invitation out of the proceeds.”
ECL was founded in 2001 by Ian Dear, also its CEO, to operate a few gift shops and restaurants under franchise in the departure lounge at the SIA in Montego Bay. The company in 2011 secured a master deal to service all the food and beverage outlets in the departure lounge of the airport. The company then also embarked on an expansion drive that resulted in its shares being listed on the junior arm of the JSE in July 2017.
On Tuesday, both Mayberry Investments and ECL declined to speak due to regulatory requirements. Sources within the financial sector anticipate that upon repaying Sygnus, ECL’s liabilities related to debt would increase from US$9.5 million to about US$11.5 million. Despite this rise, interest payments remain well covered, with the debt-to-equity ratio projected to move from 135 per cent to around 165 per cent.
Since the onset of the pandemic, ECL has pursued an aggressive expansion strategy, increasing its restaurant and bar count from 24 to 31 to align with Sangster International terminal’s broader expansion led by airport operator MBJ Airports Limited.
The company’s financials reflect substantial progress, with work in progress valued at US$3.2 million in November 2023, up from US$773,000 the previous year.
Revenue growth has been robust, climbing 23 per cent year-on-year to US$5.2 million by November 2023, with six-month revenue reaching US$11.6 million compared to US$9.1 million a year earlier.
Earnings have doubled over the past three years, with a return on equity standing at 41 per cent.
Against the backdrop of increased travel demand, SIA welcomed 5.27 million passengers in 2023, marking a 19.6 per cent increase from the previous year.