Access Financial Services Limited (AFSL) is looking to refinance part of its debt and expand its working capital through the issuance of a $2-billion unsecured five-year bond set to open on June 28.

The bond falls under the Financial Services Commission’s (FSC’s) exempt distribution and has a minimum subscription of $5 million with denominations of $1 million. It will see interest payments paid quarterly with a final bullet payment at maturity in June 2027. The interest rate will be initially set to 11 per cent for the first two years and become a variable interest rate as 300 basis points (3.00 per cent) plus the Government of Jamaica three-month weighted average treasury bill yield (WATBY). The facility can be used for repurchase agreements. The bond can be repaid early in years four and five at no premium on the principal and no penalty interest. The offer is being arranged by Proven Wealth Limited which is a wholly owned subsidiary of Proven Investments Limited (PIL), the second-largest shareholder in AFSL.

AFSL’s current loan payables as of December stood at $2.55 billion with the group receiving $161.38 million in new net loans over the nine months. The company currently has two bonds due 2025 and 2026 valued at $1.29 billion with similar terms to the new bond except it was done on the six-month WATBY plus 250 basis points (2.50 per cent). Some of the bonds were disbursed in 2019. With the May WATBY at 8.25 per cent, the new reset rate could be around 10.75 per cent. The refinancing would lock in rates for AFSL as the WATBY explodes simultaneously with the Bank of Jamaica (BOJ) moving its policy rate tenfold to 5.00 per cent and set to make a decision at its June 29 meeting.

Various listed companies from JMMB Group Limited to Seprod Limited are being impacted by the rising treasury bill yields for their variable rate instruments which are now eclipsing the issuance rate. Community & Workers of Jamaica Co-operative Credit Union Limited announced that its deferred shares rate would be reset to 9.96 per cent effective June 16, well above the 7.35 per cent issuance rate and three to four per cent it enjoyed over the last two years. Its listed Series A deferred shares are redeemable in June 2023 and are valued at $400 million. The credit union repurchased $14.94 million or 7.47 million shares in December below the redemption price of $2.

AFSL’s 2022 audited financials are delayed and should be submitted by June 24 to the Jamaica Stock Exchange (JSE). The company’s board will be holding a dividend consideration meeting on June 17.

The microfinancier’s net loan balance has been trending back up to pre COVID-19 levels with $4.51 billion in December relative to the record $4.70 billion it had on books in September 2019. This has contributed to the rebound in the group’s interest income which was up seven per cent to $1.22 billion over the nine months. It also operates a money services division which earned $869,000 and a bill payment services segment. Other income increased by 10 per cent to $109.18 million with the group’s consolidated net income doubling to $264.74 million, but still trending below its pre-COVID-19 profitability which also included the Junior Market tax remission. AFSL earned $476.85 million in consolidated net profit in 2019 and $716.03 million in net profit for 2018.

AFSL expanded the board limit from the current seven to 11 at its September annual general meeting. The company is currently set to become regulated by the BOJ next month when the Microcredit Act comes into force. James Morrison, Michael Shaw and Justine Collins are currently the company’s independent directors with the rest being either shareholder appointed or affiliated with the largest shareholders. This satisfies the new requirement that at least one-third of the board of directors should be independent directors. It also might be able to capitalise on the potential exits of existing players who are unsuccessful in getting a licence from the BOJ.

While AFSL looks to grow its loan book again, founder and Executive Chairman Marcus James is currently in a legal battle with his estranged wife Julie Anne Thompson-James who is seeking information on the founder’s assets and has sought an affidavit freezing order to prevent him from disposing or transferring them to other parties. James maintains his interest in AFSL through Springhill Holdings Limited (SHL) which owns 47.33 per cent of the company. James’ listed interests brings his control in the company to 47.43 per cent. SHL is a St Lucian international business company which means dividends paid to it are not taxed.

Justice C Stamp heard the case via videoconference in the Supreme Court of Jamaica’s civil division on February 24 with the case number being SU2022CV00346. Hylton Powell was listed as the firm seeking the freezing order. This is the most recent legal battle for the founder who was at odds with Mayberry Jamaican Equities Limited (MJE) directors in 2014 which was eventually settled when PIL bought the MJE stake.

AFSL’s stock price remains flat year to date at $20.45 which is far from the $45 price at the end of June 2019. The company’s market capitalisation stands at $5.61 billion. Its total assets stood at $5.81 billion with shareholders equity of $2.67 billion as of December.