Wed | Sep 30, 2020

Eppley refinances USD preference shares

Published:Wednesday | August 5, 2020 | 12:19 AM
Managing Director of Eppley Limited, Nicholas Scott.
Managing Director of Eppley Limited, Nicholas Scott.

Eppley Limited, which mainly provides loan financing and manages a real estate fund, has extended the life of one of its four preference stocks by three years, a refinancing deal that will allow it to hang on to cash for other purposes.

The Eppley 5.0%, which is denominated in US dollars, will also pay a higher coupon rate of 6.0 per cent under the extended timeline, based on an agreement reached with holders of the stock.

“The objective of this transaction was to deliberately strengthen Eppley’s maturity profile and boost its liquidity to take advantage of opportunities in our investment pipeline,” said Eppley Managing Director Nicholas Scott via email.

The value of the preference shares stands at US$4.76 million or about $700 million in local currency, according to Jamaica Stock Exchange data on Tuesday. The refinancing will allow Eppley to push back redemption of the shares from January 2021 to January 2024.

The dividend rate of 5.0 per cent per annum, payable monthly, will remain the same up to next January. Beyond that, shareholders will earn dividends at the new 6.0 per cent rate.

Scott said the higher rate reflects the “longer tenor and current market conditions”.

Eppley has four preference shares on the market but the refinancing only relates to the USD issue. The other three are denominated in Jamaican dollars, with coupons ranging from 7.5 per cent to 8.75 per cent.

Scott, meanwhile, is telegraphing optimism about the company, amid market uncertainty.

“Eppley’s culture, investment philosophy and business model were developed to thrive in uncertain market conditions. With considerable ‘dry powder’ in our funds and on our balance sheet we expect to put capital to work in the current environment,” he said.

At the end of March, Eppley’s borrowings were estimated at $2.95 billion, which was nearly four times its capital of $786 million. The company’s profit grew to $40 million for the March quarter from $6.25 million a year earlier.