Fri | Jan 22, 2021

FosRich seeking $760m from debt market

Published:Wednesday | January 29, 2020 | 12:20 AM
Cecil Foster, CEO of FosRich Company Limited.
Cecil Foster, CEO of FosRich Company Limited.

Lighting company FosRich is approaching the debt market to raise $760 million, most of which will replace existing borrowings.

The company has asked Mayberry Investments to arrange an asset-backed corporate note valued at $560 million and $200 million in unsecured notes. The secured notes are backed by shares in FosRich.

The notes which mature in three years, in 2023, will pay interest monthly at a rate of 6.25 per cent per annum for the secured debt and 8.5 per cent for the unsecured bond.

Managing Director of FosRich Company Limited Cecil Foster says the notes represent a rollover of previous issues, with a little left over for working capital.

“A total of about $660 million comes due in 2020. What we want to do is to retire those notes and leave us with a little room to fund some operational activities,” Foster said.

The debt being replaced was issued in 2018, capital that FosRich used to fund its expansion to western and central Jamaica, improve the company’s information technology and inventory management systems, and finance the buildout of its PVC pipe-manufacturing operation, he said.

With the rollover, the company’s debt profile has changed. It now has a five-year window to pay off its borrowing, at cheaper rates.

“The new interest rates are lower than the original rates. The bonds were increased by $100 million to repay an existing line of credit,” Foster added.

The pipe-manufacturing operation came on stream in May 2019. It produces PVC pipes and conduits of various sizes on a 24/7 basis – that is, 24 hours per day, seven days per week.