Pan Jamaica Investment Trust (Pan Jam) has raised $340-million for the refurbishing of the former Oceana Hotel in downtown Kingston through a private bond placement last week.

The medium-term bond offer, which was facilitated by Scotia Investments Jamaica Limited, was issued under the Urban Renewal (Tax Relief) Act, designed to encourage the redevelopment of downtown Kingston and allows developers to raise tax-free funds.

According to Scotiabank, the tenure of the bond is seven years with an average life of five years when factoring in amortisation. The coupon rate is fixed for two years and floating thereafter at the Government of Jamaica six-month weighted average treasury bill yield (WATBY) plus 150 bps.

“The Urban Renewal Act was designed to promote the development of areas like downtown Kingston, an objective which has long been a goal of Pan Jam, and we are extremely pleased to be able to avail ourselves of the provisions of the Act in playing our part in the revitalisation of the city’s waterfront,” Pan Jam CEO Stephen Facey stated.

Oceana Hotel, located on the waterfront in downtown Kingston, falls within a Special Development Area for the purposes of the Urban Renewal (Tax Relief) Act that allows for the issuance of bonds without withholding tax being deducted from its interest payments.

This allows Pan Jam to raise funds at rates which are less expensive and which offer an investor yield that is comparable to, or better than a taxable instrument. The issue and transfer of those bonds will also be exempt from transfer tax and stamp duty.

The bonds were taken up by a small group of large institutional investors.

“This was a very significant transaction as it demonstrates the ability of companies to raise funds at attractive rates under the Urban Renewal (Tax Relief) Act for developments in downtown Kingston and the appetite of investors for these types of bonds,” said Dylan Coke, vice-president – Origination & Capital Markets at Scotia Investments Ltd.

Pan Jam is a multi-faceted holding corporation that owns and operates businesses across a range of industries. Headquartered in Kingston, Jamaica, Pan Jam is one of the largest publicly traded companies in the Caribbean. Through its subsidiaries and associated companies, Pan Jam engages in property development and management, tourism and hospitality, manufacturing, processing and export of food, financial services and investment.

— Karena Bennett

— Karena Bennett