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If all goes well, Mayberry-backed Access Financial Services Ltd wants to be the first company to be listed on the Jamaica Stock Exchange’s Bond Market. However standing squarely in their way is Jamaican Teas Ltd. Both companies issued prospectus documents for their corporate bond offers last night on the Jamaica Stock Exchange.
Winning is everything? by hikingartist
Jamaican Teas Ltd, which was the first to publicly mention their intention to list on the bond market has been working on their offering since July 2013, while Access Financial has now emerged out of nowhere to spoil their party. Or can they? If only lead broker Stocks and Securities Ltd had worked a little faster. Sigh. Now Jamaican Teas will have to share the spotlight as both companies jostle for bragging rights. In fact Access Financial’s offer was the first to be posted on the JSE’s website late yesterday afternoon, quickly followed by Jamaican Teas Ltd. Talk about first to market!
Not shy of the competition Lead Broker Mayberry highlights their unequivocal intention in the prospectus for Access Financial Ltd (there’s a typo in it by the way, Mayberry). It reads;
The Company was the first company to list on the Junior Market of the Jamaica Stock Exchange, and it keeping with its innovative approach it will apply for listing of the Notes on the newly established Bond Market trading platform of the Jamaica Stock Exchange.
… but I think what they really wanted to write was…
The Company was the first company to list on the Junior Market of the Jamaica Stock Exchange, and in keeping with its innovative approach it will apply for THE FIRST listing of the Notes on the newly established Bond Market trading platform of the Jamaica Stock Exchange.
Emphasis on ‘the first’, because I know they want to hit those guys where it hurts and have that title forever and ever, as the the first company to list on both markets. Anyways, back to the offers, which are both competitively priced and packaged.
The Bond Offers
Jamaican Teas is seeking to raise J$200 million by issuing a 4 year note that will mature on November 06, 2017. The bond will have a fixed rate of 8.50% for the first 2 years after which the rate will be variable for the next 2 years. For the last two years interest will be calculated at a floating rate equivalent to 180 day weighted average Treasury Bill Yield + 2.50%. Interest will be paid monthly on this bond. Additionally, this note has a call option and commencing on the second anniversary of the issue of the Note, the company will have the right, at its option, to redeem the note, in whole at any time or in part from time to time.
On the other hand, Access Financial Services Ltd, is seeking to raise approximately J$102.5 million from prospective investors at an interest at a rate of 9% per annum. Principal will be payable on the maturity date in November 2014, on the date falling 13 months after issue of the Notes. Interest will be due and payable 6 months from the issue date, in April 2014 and then any remaining interest shall be payable on maturity. This offer is for one year compared to the 4 year bond offered by Jamaican Teas.
Use of Proceeds
Access Financial intends to use the proceeds of the issue in order to expand its loan portfolio and for working capital and general corporate purposes. About $5 million will go to Mayberry for expenses related to the listing. Jamaican Teas on the other hand will use the funds raised to refinance current debt obligations and for general working capital support of the Company. Stocks and Securities should get about $6 million as fee income.
The Companies
With both being publicly listed companies we already know a little about them both which makes the necessary due dilligence a little easier.
Founded by Marcus James, Access Financial Ltd began operations in September 2000 at 41B Half Way Tree Road, and had as its primary objective the provision of financial services to the micro and small business sector. Loans made by the Company have since grown from under J$100 million when it began trading in 2000, to a net loan portfolio of J$801 million at the end of December 2012. They offer personal loans ranging between J$10,000 and J$1.5 million with repayment terms ranging between 3 months and 4 years to both private and public sector employees and the company endeavours to approve loans on the same day. Repayments are made through salary deduction or standing order.
Jamaican Teas Ltd currently offers approximately 45 products in total in the Tetley and Caribbean Dreams lines. The Company began its operations on October 3, 1967 as the Tetley Tea Company (Jamaica) Limited, a joint venture between the Tetley Tea Company of London England, and a group of local companies and individuals. At that time, it imported, packaged and sold black tea under the Tetley brand to the Jamaican market. The Company was later purchased by Neal & Massy (Jamaica) Limited and in January 1996 it was sold by that entity to the current majority shareholders, the Mahfood family.
The Company believes that its market share for its combined range of Tetley and Caribbean Dreams tea products exceeds 50% in Jamaica, based on review of supermarket sales data and surveys, but the Company also believes that its
market share for tea products in the countries it exports to is relatively low and that will grow in the future through consistent marketing efforts including market visits and tastings, as well as traditional advertising which it plans to commence in 2014.
The Company is particularly proud of its Caribbean Dreams line of herbal teas which it has grown from scratch to the point where it is the market leader in the herbal tea market in Jamaica and most of the Caribbean markets.
Offer Dates
Access Financial will be the first to open their offer and will get a head-start as their offer goes live at 9:00 a.m. on Tuesday October 8, 2013 and should close by Tuesday October 15, 2013. The Jamaican Teas offer will open on October 17, 2013, by which time all being well Access Financial should be well on its way to being the first company to list a corporate bond on the JSE’s platform.
