Sat | Aug 19, 2017

NCB Group finances Royalton expansion

Published:Thursday | April 13, 2017 | 4:00 AM
A section of Royalton Blue Waters.

With the successful completion and opening of three hotels on the island, Blue Diamond Hotels and Resorts (BDHR) is seeking to further expand operations in Jamaica, through financing from National Commercial Bank Jamaica Limited's Corporate Banking Division and NCB Capital Markets Limited (NCBCM).

Recognising BDHR's characteristically low loan-to-asset value ratio and its position as a leading player in Jamaica's tourism industry, the NCB team recently tailored a US$100-million financing package for the operators of Royalton hotels.

The deal, structured over 10 years, comprises a US$50-million loan from the Corporate Banking Division, and a US$50-million bond brokered by NCBCM. The loan will largely be used to refinance existing debts, while proceeds from the bond offering will finance the expansion of BDHR hotels.

The transaction was structured to include a 12-month moratorium on principal repayment coupled with a mix of floating rates on the loan and a fixed coupon rate on bonds.

This is NCB Group's second-largest, successfully closed transaction this financial year, with additional mandates for raising capital and securing financing under discussion with other players in the tourism sector.

 

INCREASED TOURISM APPEAL

 

Winston Lawson, assistant general manager, NCB Corporate Banking, noted that this transaction will facilitate the repositioning of the country and the region as an even more attractive option for tourism.

"NCB is proud to serve as Royalton's primary local financier, as they continue to invest in Jamaica and indeed the wider Caribbean. This development speaks volumes about the viability of investment projects of similar nature in the region, as well as BDHR's capacity to improve their offering," Lawson said.

"We are always looking for opportunities that add value to our clients and redound to the benefit of the economy, whether it is to facilitate the growth of a company or to provide refinancing options," said Herbert Hall, assistant vice-president - investment banking, NCBCM.

Sunwing Travel Group (the parent company of BDHR) first approached NCB to finance the acquisition and construction of resort properties on Jamaica's north coast following a 2010 agreement with the Government of Jamaica, to increase airlift into Montego Bay.

The collaboration spawned the Royalton White Sands in 2013, Royalton Blue Waters in 2016, and the newly built Royalton Negril set to open this year. Under the BDHR's brand, more than 1,000 rooms have been added to the island's inventory, attracting 120,000 visitors to Jamaica in 2016. In addition, it has injected some US$120 million into the local economy, creating more than 3,000 direct jobs.

Sunwing Travel Group Inc is a Canadian-based travel company which has ownership of its own supply chain, operating a fleet of airlines, as well as North American booking agents, tour operators, and hotel chains across the Caribbean.

With more than 40 years of experience in the travel industry, the company has received numerous industry awards, including TripAdvisor's Award for Excellence, and coveted title of Number One All-Inclusive Resort in the World.