Mayberry Jamaican Equities Limited (MJE) will be raising between $1 billion to $1.5 billion from investors through a new secured bond issuance to refinance existing debt and expand its investment portfolio.

MJE redeemed tranche I of its listed bond on July 25 which had a face value of $996.40 million and an interest rate of 9.25 per cent. The investment company now intends to refinance tranche I through the issuance of two tranches in a new secured bond which should be listed on the JSE’s Bond Market.

Tranche I of the secured bond will offer an 8.75 per cent interest rate for 13 months while tranche II will offer a 9.25 per cent interest rate for 23 months. Each tranche has a size of $500 million and can be upsized in either or both tranches to bring the total debt raise to $1.5 billion.

The bond will be secured by 115 million ordinary shares of Supreme Ventures Limited (SVL), the company’s largest asset. These shares were worth $2.28 billion on July 7 which translated to a collateral coverage ratio of 1.52 times.

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 both tranches. Interest will be paid to bondholders every quarter, with the first payment scheduled for September 30.

MJE raised $3.375 billion in June 2024 through three tranches with interest rates ranging from 9.25 per cent to 10.50 per cent to partially repay a margin loan facility to Mayberry Investments Limited (MIL), another subsidiary of Mayberry Group Limited, and expand its investment portfolio. MJE currently has two tranches listed on the Jamaica Stock Exchange (JSE) Bond Market while MIL has three tranches listed. MIL issued a $3.456 billion bond with a 10.25 per cent interest rate in March.

MJE’s business involves holding long-term portfolio investments and active trading of Jamaican stocks on the JSE. As a result, it derives its income largely from dividends from stocks, interest income from repurchase agreements, and realised gains on equity securities.

The company realises some long-term investments such as its July 2024 sale of Caribbean Producers (Jamaica) Limited for $2.3 billion. MJE also sold Access Financial Services Limited and Lumber Depot Limited in prior years when it realised the gains on those investments.

MJE holds equity positions in more than 30 companies listed on the JSE that was valued at $19.18 billion (US$120.12 million) as of June 30. MJE’s top 10 positions represented 90.4 per cent of the overall investment portfolio.

SVL represented 55.7 per cent of MJE’s investment portfolio. MJE is the second largest shareholder in SVL with a 19.0571 per cent stake. The company’s long-term holdings also include equity positions in Jamaica Broilers Group Limited, Wigton Energy Limited, IronRock Insurance Company Limited, Dolla Financial Services Limited and Lasco Financial Services Limited.

MJE’s six-month (January to June) numbers saw it report a $3.13 billion total operating loss compared to $117.73 million in total operating income for the prior 2024 period. The loss was attributed to $3.24 billion in unrealised losses on its equity investments and 58 per cent dip in dividend income from $295.19 million to $123.03 million. After accounting for interest expense and operating expenses, MJE had a net loss of $3.55 billion compared to a net loss of $468.13 million in the prior period.

MJE’s asset base declined 16 per cent over the six months period from $23.65 billion to $19.87 billion with cash at $323.42 million. Total liabilities increased six per cent to $6.11 billion while shareholders equity closed at $13.76 billion for a book value of $11.46. MJE is a subsidiary of Mayberry Group and is managed by Mayberry Asset Managers Limited, which is controlled by executive directors Christopher and Konrad Berry.

The offer opens on August 21 and closes on September 12. 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. The minimum amount to subscribe to either tranche is $20,000 with increments of $10,000. The expenses associated with the offer should not exceed $40 million.