VM Investments Limited (VMIL) will be approaching the public to raise $5.434 billion in a public bond offer to refinance a portion of its maturing debt.

The company published its prospectus yesterday, which will see the holding company seek to raise up to $1 billion for tranche D, $2 billion for tranche E, and $2.434 billion for tranche E of its unsecured bond. VMIL intends to have this bond listed on the JSE’s Bond Market, which currently has six listings evenly split between Mayberry Investments Limited and Mayberry Jamaican Equities Limited.

While other bond offers usually have a fixed rate for each tranche to all investors, VMIL will be offering a sweetener to investors who make substantial subscriptions to any tranche. Thus, while tranche D offers a headline 9.75 per cent interest rate, anyone who subscribes to more than $5 million of the bond will be paid a 10 per cent coupon. Tranche E offers a headline interest rate of 10 per cent, but those who subscribe for more than $5 million will receive an 11 per cent coupon. Tranche F will pay a fixed 10.50 per cent interest rate for the first two years but would reset in the third year to the Bank of Jamaica’s (BOJ) 90-day weighted average treasury bill yield (WATBY) plus a two per cent (200 basis points) margin. Investors who invest more than $5 million in this portion would receive a fixed 11.50 per cent for two years before the interest rate adjusts to the terms mentioned before. The two per cent margin would be cut by 0.25 per cent (25 basis points) for every Caribbean Information and Credit Rating Services Limited (CariCRIS) rating upgrade VMIL receives subject to this margin not going below zero. Tranche D is for 18 months, with a June 2026 maturity date; tranche E is for 24 months, with a December 2026 maturity date; and tranche F is for 36 months, with a December 2027 maturity date.

“This bond offer is a strategic move to enhance VMIL’s financial flexibility and to give the public an opportunity to invest in a stalwart of the Jamaican financial landscape. By issuing new bonds to replace existing ones, the company aims to extend the maturity dates of its current debt, providing longer repayment periods. This approach ensures that VMIL can maintain robust liquidity, effectively manage cash flows, and pave the way for sustained future growth through more acquisitions and private equity investments,” VMIL said in a press release.

VMIL had previously issued a $5.8-billion unsecured bond during 2022 across four tranches. The public bond offer will be meant to refinance tranche A, which had a face value of $642.97 million, with a maturity date of March 31, 2024 and tranche B, which has a face value of $4.76 billion, with a maturity date of December 30, 2024. According to VMIL’s third-quarter (July to September) report, the group’s borrowings was cut by $1.08 billion over the nine months and currently stood at $7.64 billion. This public offer also represents the first public deal VMIL has made following its July 11 annual general meeting when its shareholders approved an increase in its authorised ordinary share capital to an unlimited amount and the ability for the company to issue preference shares from time to time.

VMIL’s nine months interest income was down two per cent to $1.29 billion, but its net interest income improved 16 per cent to $118.10 million. Net interest income and operating revenue grew 47 per cent from $1.37 billion to $2 billion, which was largely due to $1.12 billion in gains from investment activities during the period. The substantial gains from investments were largely related to VMIL’s sale of its 30 per cent stake in Carilend Caribbean Holdings Company Limited to VM Financial Group Limited, its direct parent company. VMIL acquired its original Carilend stake for US$750,000 ($106.10 million) in August 2019 before selling it to VM Financial for US$4.92 million ($759 million) on March 27. VMIL extended a loan to its parent company for two years related to this sale.

VMIL’s operating profit was up 208 per cent to $580.60 million while the consolidated net profit for the period was up 240 per cent to $647.21 million.

Total assets for the nine months were up two per cent to $30.03 billion, with investment securities rising to $19.92 billion, while its cash stood at $1.13 billion. VMIL acquired Republic Funds (Barbados) Incorporated (now VM Wealth Funds Limited) on January 19 for US$400,000 ($64 million). Total liabilities and shareholder’s equity was $25.34 billion and $4.69 billion, respectively.

All applications will have to be done through VM Wealth’s Wealth Edge IPO platform (
https://wealthipo.vmbs.com/). The minimum subscription amount for the bond is $10,000, while increments can be done in $5,000 blocks. The offer opens on December 19 and closes on December 27. This is just before Sygnus Credit Investments Limited’s perpetual preference share offer is set to close on December 30.

— David Rose