138 Student Living raises $6.7b
Listed construction start-up 138 Student Living Jamaica Limited negotiated $6.7 billion in loans last year, the majority of which is to be drawn down at a later date as its projects unfold, but the company appears to have mistakenly identified the JSCD Trustee Services as one of its backers in disclosures to the market.
JSCD Trustee's ultimate parent, Jamaica Stock Exchange Group (JSE), has distanced itself from the disclosure made in the student housing developer's first set of audited accounts recently posted on the exchange.
The accounts disclosed two new loans acquired during 138 Student's financial year ending September 2015.
"The company negotiated a loan from JCSD Trustee Services Limited having an aggregate principal value of $4.3 billion and as at 30 September 2015, $3.3 billion have not been disbursed and are not reflected in the financial statements," stated Note 30 of the audited report.
"There is also an arrangement with Victoria Mutual Wealth Management and 138 SL Restoration Limited for a period of five years to raise up to $2.4 billion. Amount disbursed as at 30 September 2015 was $153.9 million," it said.
138 Student Living has secured concessionary agreements with the University of the West Indies (UWI) to finance, develop and operate dorms on the Mona campus and to renovate other residential facilities there. 138 SL Restoration is its subsidiary. More recently, the company struck a concessionary deal with University of Technology Jamaica to build 600 rooms costing $2 billion over a two- to three-year period, starting July 2016.
The company held $1 billion on its balance sheet as long-term loans up to September 2015.
JSCD Trustee is not known to be in the business of structuring financing or making loans, but acts as a custodian of investors' funds. The JSE indicated that its JCSD subsidiary may act on behalf of noteholders, but distanced itself from a statement in the 138 Student accounts that the company raised $4.3 billion from JCSD Trustee Services.
"I have looked at Note 30 of the audited financial statements of 138 Student Living. The note does not convey the proper relationship between the company and the JCSD Trustee Services Limited," said JSE General Manager Marlene Street Forrest via email to the Financial Gleaner.
"JCSD Trustee Services Limited is acting as trustee for the benefit of the noteholders in a secured note issued in three tranches by 138 Student Living. Our responsibility for this note, and all other notes issued by the company, is governed by the terms and conditions of the trust deed signed by 138 Student Living and JCSD Trustee Services Limited," Street Forrest said.
Chairman of 138 Student Living John Lee indicated later that the phrasing would change in subsequent earnings reports.
"The note is saying that we have commitments or contracts with FirstCaribbean International Bank and VMBS Wealth Management to raise these funds for us. It really is not a significant note as it will change when we get a better feel for University of Technology capital requirements or if our capital requirements were to increase," he told the Financial Gleaner.
The construction company's financials were audited by BDO Chartered Accountants.
A report from state-owned media JIS disclosed Monday, January 12, that National Commercial Bank Jamaica (NCB) and state-run Jamaica Mortgage Bank (NCB) will be backing the second phase of the Mona student housing project with new loans of $1.7 billion to 138 Student Living.
The first phase of that project was also financed by JMB and NCB with a construction loan in the amount of $1.35 billion.