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JCPS raises $1.2b of financing through bond placement

Published:Friday | February 12, 2016 | 12:00 AMSteven Jackson
Karl James

Jamaica Cane Product Sales Limited (JCPS), owner of the Jamaica Gold brand and a marketer of raw bulk sugar, has raised $1.2 billion of debt financing in private placement of short term fixed-rate notes arranged by Scotia Investments Jamaica Limited.

The funds raised will finance pre-export working capital needs for the 2015/16 sugar crop.

"Scotia investments is very pleased to have assisted JCPS with a creative funding solution, particularly as JCPS supports sugar manufacturers and cane farmers across the length and breadth of Jamaica," said Scotia Investments vice president of origination and capital markets, Dylan Coke, in a company statement.

Scotia acted as arranger and broker to the transaction which was fully taken up by a small group of institutional investors. The proceeds from the sale of sugar will act as security for the borrowing by JCPS, a marketing company owned by sector interests.

Last March, JCPS revealed that Scotia Investments secured a $2.8 billion bond for the entity for similar purposes. Previously, such loans were secured through Bank of Nova Scotia in Canada.

JCPS operates as an agent of the Sugar Industry Authority (SIA) with private sector ownership from cane farmers and manufacturers that include Worthy Park, Appleton, Golden Grove and Everglades Farms. The Chinese-owned Pan Caribbean Sugar Company is not included in the ownership of JCPS.

Up until 2012, the company was the sole marketing agent of the SIA and the only entity authorised by the Sugar Industry Authority to undertake the commercial functions associated with the marketing of Jamaican sugar destined for export, to the preferential quota markets in the European Union and the United States, said the release. They also held the sole right to import raw sugar into the island.

But, since then, Pan Caribbean Sugar and Golden Grove Sugar Company have also been designated marketing agents, which means those companies have autonomy over the sale and distribution of their sugar output, and are not required to participate in the JCPS pool.

The Ministry of Agriculture and SIA have been liberalising the marketing arrangements for sugar as trade preferences for exports to Europe recede and the local retail markets for the commodity expand. JCPS, run by general manager Karl James, has been a leader in the retail segment with its Jamaica Gold brown sugar and a packaged refined sugar product.

Last financial year ending October 2015, the capital markets unit of Scotia Investments raised a total of US$79 million ($9.5 billion) for corporate clients, the company's financials indicate.

Scotia Investments made pre-tax profits of $1.5 billion in 2015, down from $2.6 billion in 2014 and $2.75 billion in 2013, according to the annual report of its parent Scotia Group Jamaica.