Dolphin Cove secures US$1m line of credit as safeguard
Marine park operator Dolphin Cove has secured a US$1 million line of credit from Sagicor Bank which it will use as emergency cash to keep business running, in the event that the fallout from COVID-19 is prolonged.
Dolphin Cove applied for the credit facility in August but was approved for the loan earlier this month.
The interest charged by Sagicor was not disclosed. Any drawdown on the facility would be converted into short-term debt on the marine park operator’s books.
“We haven’t used any of the money,” said CEO Stafford Burrowes.
“Its just a precautionary measure in case the effects from the pandemic should last very long. This will release some of the pressure on our cash flow position and help us to navigate the months to come,” he told the Financial Gleaner.
For years, Dolphin Cove has operated debt-free amid profitable operations, which put the company in a good position to access additional cash if and when needed.
The outbreak of COVID-19 in Jamaica forced the closure of its six parks for around three months, which meant no revenue was flowing in the period, and with ongoing maintenance of the dolphins among other recurring expenses, Dolphin Cove’s was forced to dip into its cash resources. Those holdings have started to decline, forcing the company to weigh alternative funding in case conditions in the market worsen.
Dolphin Cove began a phased reopening in July and up to end-October was at a 30 per cent occupancy rate for all its attractions, except Dolphin Cove Ocho Rios, which remains closed awaiting a rebound in cruise tourism.
The company is expecting more visitors to its marine attractions during the peak winter tourist season, but it’s not as optimistic about the prospect for tourist traffic, with the recent Level 4 classification imposed on Jamaica by the Centres for Disease Control and Prevention, CDC, which is expected to curtail travel.
The United States Government’s lead public health agency last week included Jamaica on a list of more than 180 countries to which Americans should avoid travel if possible, but should they travel, warned that extra precautions, including testing before departure, wearing masks, and practising social distancing, among other recommendations must be taken.
“We applied for the loan some time ago, but in the last three months, a lot has happened in regard to the projected time that the pandemic is going to last. It was done on the basis of extreme precaution, but it’s good to know that we have it because things are constantly changing,” Burrowes said.
At the end of September, Dolphin Cove’s working capital was down 42 per cent year over year at US$1.4 million. Burrowes, in his report to shareholders, noted that while working capital was under pressure, due to the reduction in business activities, Dolphin Cove has managed to maintain payments to its suppliers.
Dolphin Cove generated revenue of US$319,744 from operating activities between July and September. The marine park operator closed the quarter with US$470,000 in cash, which is just around half of the US$979,000 it held a year ago.