Tuesday 19 March, 2019

Sagicor raises US$180 million for JPS

Vernon Douglas, Chief Financial Officer at JPS

Vernon Douglas, Chief Financial Officer at JPS

Sagicor Investments Jamaica Limited (SIJL) and Sagicor Bank Jamaica Limited (SBJL) have successfully raised US$180 million via two bond offers and syndicated loan for local utility provider JPS.  Proceeds of the raise will go towards refinancing one of the utility company’s existing debt.

The total bond offers, which opened on February 8 and closed on the 22nd, saw Sagicor Investments raising JMD$10.68 billion and US$34 million in bonds and Sagicor Bank raising US$66 million in syndicated loans. The debt offering was taken up by local banks, institutional investors and retail clients.

Vernon Douglas, Chief Financial Officer at JPS said “JPS is delighted to have secured financing on favourable terms on the back of the company’s strong credit ratings and our continued stable business performance.”

He added: “It is important to us to have undertaken this with our partners at Sagicor Investments and Sagicor Bank, and we are pleased that our local operations will benefit from this debt restructure arranged and executed by Sagicor, a local institution.”

Mischa McLeod-Hines, Assistant Vice President, Capital Markets at Sagicor Investments said the successful bond raise and syndicated loan are another examples of Sagicor’s commitment to developing the economic capacity of the country through the strengthening of local companies.

“Sagicor Investments, together with Sagicor Bank, is happy to have played such a significant role in this transaction for JPS, and on a wider scale for Jamaica,” she said, adding: “It also speaks to our ability to raise significant capital to support local and regional companies in optimising their operational position.”

McLeod-Hines added: “This was the ideal time for JPS to refinance, taking into consideration Jamaica’s improving economic conditions. It also was an opportunity for local investors to participate in an occurrence which was once the domain of international financiers. Sagicor is committed to developing the nations in which we operate and offer all investors the opportunity to create, grow and preserve their wealth.”

She explained that JPS’ decision to refinance this debt translates into significant savings per annum for the remaining three years of the utility company’s debt, as it lowers JPS’ interest costs and reduces currency risk. She noted that the debt being refinanced is at 11 per cent (USD), with the replacing debt is priced at 7.35 per cent (USD) and 8.40 per cent (JMD).

JPS has embarked on a series of investments for greater fuel diversification and improving operating efficiencies, among them is a 190-megawatt (MW) power plant in Old Harbour Bay, St Catherine, set to be completed this year.

The new plant will operate on natural gas (NG) and will play a pivotal role in reducing Jamaica’s dependence on oil for electricity generation. The inclusion of NG in the fuel mix for power generation is expected to result in the stabilisation of fuel costs over the long term while enhancing energy security and the integration of more renewables on the grid, JPS said in its 2017 annual report.

“The improved technology will lower generation costs, as well as Jamaica’s exposure to the volatility of world oil prices. The natural gas plant will replace some of the generating units that operate on heavy fuel oil, resulting in much cleaner and more environmentally-friendly energy,” Douglas shared.

He added that JPS remains committed to providing its customers with the most cost-efficient energy delivery.

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