MAYBERRY Jamaican Equities Limited (MJE) has moved to increase the size of its secured bond offer after investors took up the original $1.5-billion target ahead of schedule, pushing the company further into a refinancing exercise that could raise as much as $2.25 billion.

The listed investment company said its board had exercised the upsize option contained in its August prospectus following excess demand for the 36-month bond. The offer, which was originally scheduled to close on September 10, will now remain open until September 24 at 4:30 pm, although MJE retains the right to close it earlier.

MJE did not say in its latest notice how much of the additional $750 million it intends to take up, but the prospectus allows the company to increase the bond from the initial $1.5 billion to a maximum of $2.25 billion.

The bond carries a fixed interest rate of 9.50 per cent per annum, with interest paid quarterly over the three-year term. The minimum subscription is $20,000, with additional investments accepted in increments of $10,000.

The additional funds form part of a broader refinancing of MJE’s existing obligations.

According to the company’s August 13 prospectus, proceeds are expected to be used primarily to repay approximately $1.4 billion in debt, including an 8.75 per cent secured bond tranche due in October 2026, a 10 per cent secured bond tranche due in August, and part of a revolving margin loan facility. At the initial $1.5-billion offer size, those repayments would absorb most of the proceeds.

The 9.50 per cent rate on the new bond sits between the rates on the two secured tranches being refinanced. The prospectus does not break out the balances attached to each obligation or the cost of the margin facility, making it difficult to determine whether the transaction will ultimately lower MJE’s overall borrowing cost.

“The response to this offer speaks to the confidence investors continue to place in Mayberry Jamaican Equities and in Mayberry Investments Limited as lead broker,” Mayberry Investments CEO Patrick Bataille said.

“Meeting our J$1.5-billion target ahead of schedule gave the board the option to upsize the invitation, and extending the closing date simply gives more investors the chance to participate on the same attractive terms,” he added.

The bond is secured by a portfolio of listed shares held by MJE. Based on June 30 market prices contained in the prospectus, the company identified shares valued at approximately $3.55 billion that could be pledged in favour of bondholders, including holdings in Supreme Ventures, Dolla Financial Services, JMMB Group, GraceKennedy, and NCB Financial Group.

At those values the collateral would cover about 158 per cent of a fully upsized $2.25-billion issue, above the minimum 150 per cent required under the bond covenants. Because the collateral consists largely of listed equities, however, that coverage will move with share prices.

MJE intends to list the new securities on the Jamaica Stock Exchange’s Bond Market. Investors now have until September 24 to participate, unless the company closes the offer before that date.