Pulse to raise $500m for hospitality projects
The rights issue to be executed next month by modelling agency Pulse Investments Limited is targeting $500 million of fresh capital that the company plans to use to finalise ongoing projects.
Most of the funds will finance 49 suites at Villa Ronai and 19 guest rooms at Trafalgar Road.
"The units are currently more than 50 per cent complete. Funds will also be used as working capital, as required," Pulse Chairman Kingsley Cooper told the Financial Gleaner.
NCB Capital Markets is lead broker for the rights issue, which was approved by Pulse's shareholders in June.
Pulse will own and operate the rooms, which will be marketed to traditional and non-traditional visitors for both business and recreation. Most of the units would come on stream in 2018, with the remainder set for 2019 and 2020, Cooper said.
At year ending June 2017, the value of Pulse's investment property was estimated at $1.5 billion, amid total assets of $2.5 billion, and it held only $200 million in debt.
"Pulse has not borrowed or gone to the equities market in almost a decade," said Cooper, adding that the group has avoided bank loans.
Pulse's reliance on internal resources has eaten into its cash holdings, which declined to $10.6 million at year end, down from $12 million. That reduction was due mainly to the $78.6 million invested by Pulse during the year up from $40.6 million a year earlier.
"Over the past few years, significant amounts of internally generated cash have been used in construction, as well as to finance general business expansion, pay dividends and reduce debt to the point where it is at single digits, coming from over $300 million," the chairman said.
Pulse said it also plans to expand more deeply into the wider Caribbean, as well as in key markets in Europe and North America, where it would offer what it termed a "range of creative products and talent".
The Pulse Centre at Trafalgar Road in New Kingston now houses the Peter Tosh Museum. It is still a relatively small space for the museum, but there are plans to expand it. The museum continues to grow, but Pulse said it needs to do more work with tours and special groups to drive business to it.
"We will expand within the next two years, adding new wholly owned lines of income, including merchandise, new visitor experiences, food, drink, and so on, with hospitality provided through the rooms at the Pulse Centre," Cooper said.
In its newly released audited accounts, Pulse reported a spike in revenue, from $350 million to $391 million, but a fall in net profit from $377 million to $277 million. However, the disparity in its profit performance resulted from smaller tax credits of $8 million compared to $138 million in FY2016. Pretax profit improved by $29 million.