MJE seeking $3.4 b from bond market
Mayberry Jamaican Equities Limited (MJE) is set to tap the bond market to raise between $2.25 billion and $3.38 billion to refinance existing debt and expand its investment portfolio.
This is the third public bond offer in the last 17 months, with the other two being Mayberry Investments Limited’s (MIL) $6.39 billion bond raise in January 2024 and Express Catering Limited’s US$12 million bond offer in March 2024.
MJE will be seeking to partially repay Mayberry Investments $2.2 billion out of the $4.25 billion owed under a margin loan facility. The remaining proceeds from the raise will be used to expand its investment portfolio. A margin loan is a facility in which an individual or company borrows money from a lender relative to a portion of their financial security, like a stock or bond.
MJE will be offering three tranches to interested investors who can purchase any tranche for a minimum of $20,000, with increments of $10,000. Tranche I will offer a 9.25 per cent interest rate for 13 months, tranche II will offer a 10 per cent interest rate for 26 months, and tranche III will offer a 10.50 per cent interest rate for 36 months. Each tranche has a target of $750 million, which can be upsized as desired.
These interest rates are being offered at almost similar terms to MIL’s existing public bond. MIL’s tranche matured on February 20, whereby $755.22 million was repaid to investors who benefited from a 9.25 per cent interest rate for 13 months, subject to the 25 per cent withholding tax. MIL’s tranche II is set to mature on July 19 for $1.374 billion, with tranche III set to mature on January 20 for $2.282 billion. This bond was secured by a margin loan portfolio.
MJE’s bond offer will be secured by $5.54 billion of equity securities, such as Supreme Ventures Limited, NCB Financial Group Limited, Dolla Financial Services Limited, JMMB Group Limited, and GraceKennedy Limited. SVL will represent $3.52 billion of the collateral to be pledged.
MJE will be subject to financial covenants, such as net debt to equity not exceeding 0.40 times and a minimum collateral coverage ratio of 1.5 times. An interest reserve account will also be established which will equate to one quarter’s interest payment across all three tranches. Interest will be paid to bondholders every quarter, with the first payment scheduled for June 30.
MJE held an investment portfolio of Jamaican stocks worth US$152.42 million ($23.46 billion) at the end of March across 40 companies. This was a slight decrease from the US$156.18 million ($24.09 billion) valuation of the portfolio in December 2023. SVL made up 51.7 per cent of MJE’s portfolio, with its overall top 10 positions making up 88.5 per cent of the portfolio.
MJE’s business involves holding long-term portfolio investments and active trading of Jamaican stocks on the Jamaica Stock Exchange (JSE). As a result, it derives its income largely from dividends from stocks, interest income from repurchase agreements, and realised gains on equity securities.
MJE incurred a net loss of US$15.90 million ($2.45 billion) in 2023 which was due to unrealised losses from its associate company investments and higher interest costs from tapping a larger margin facility from MIL.
For the first quarter, MJE recorded a net loss of US$8.17 million ($1.27 billion), which was due to unrealised losses from its equity holdings. This was above the US$1.56 million ($237.99 million) net loss in Q1 2023.
MJE’s total assets at the end of March was US$155.20 million ($23.89 billion), with shareholder’s equity of US$106.91 million ($16.45 billion), which translated to a book value of US$0.089 ($13.70). MJE is a subsidiary of Mayberry Group Limited and is managed by Mayberry Asset Managers Limited, which is controlled by executive directors Christopher and Konrad Berry.
The offer opens on May 10 and closes on June 7. Investors can approach Mayberry Investments to apply on their digital portal or use selling agent VM Wealth Management Limited’s Wealth Edge platform to apply for the offer.