Steven Jackson, Business Reporter
The locally based Facey Group, one of the largest distribution companies in the Caribbean, has secured a landmark US$182 million (J$16.5 billion) loan for refinancing and working capital requirements within the 30 territories in which it operates.
The loan, among the largest across the private sector, is equivalent to 1.3 times the size of Jamaica's Ministry of National Security's recurrent J$12 billion budget.
The transaction was completed in February this year but remained largely unknown publicly, prior to a Scotia Investments customer appreciation awards ceremony at Scotiabank's financial centre, Constant Spring Road, St Andrew, on Monday.
"We do not want to brag about borrowing money," Dr Nigel Clarke, chief executive officer of Facey Commodity Company Limited, told Wednesday Business at the function.
Facey Group's loan trumped other Scotia Investments Capital Market awardees, including the Government of Jamaica which obtained a US$150- million bond facility; National Water Commission which received a US$115-million syndicated loan; Cost Club/MegaMart which obtained a J$1.2-billion own-lease project financing facility; Jamaica Producers Group a J$1-billion bond placement; Seprod for a J$600-million bond; and Musson Jamaica for a J$500-million bond.
US$1.2 billion in revenues
The Facey Group, one of the largest privately owned regional companies and part of the Musson Group, earns some US$1.2 billion in revenues annually, according to information posted on its website. It operates various businesses internationally across four divisions - food, pharmaceutical, telecoms and technology which includes its key Xerox dealerships across the Caribbean and Central America.
The facilities arranged by Scotia Investments consolidated various and disparate loans by different institutions in 30 markets into one comprehensive multi-currency, multi-tranche facility. It also resulted in a 300 basis-point reduction in average interest rates, banking sources say.
"The Facey Group over the last 10 years has grown and that growth had to be financed," Clarke said.
"We are everywhere in Central America, the Caribbean and beyond," he added. "Scotia Investments was able to manage an international syndicate of banks and put together one syndicated loan with one set of terms that replaced many pre-existing but separate loans each with different terms," Clarke said.
"It refinanced existing obligations and also provided working capital. But the key things are better terms, improved efficiency in administration and single documentation across 30 countries rather than multiple agreements."
The transaction faced the prospect of stalling many times, based on disparate banking and securities laws within Latin and Anglophone territories, he explained.
"It took an inordinate amount of energy and time. Many times we thought that it probably couldn't work. It was too complicated and we were trying to break new ground in doing a banking transaction across 30 markets involving Central America and the Caribbean," Clarke said.
"With banking and securities laws that were incongruous and in some places provisions considered standard in other places were non-existent ... it required a lot of innovation," he said during the awards function.
"They say bankers never die, they just lose interest," he quipped while accepting the award before expressing gratitude to Scotia.
Clarke declined to reveal the interest rate applicable to the loan, the net dollar savings or gearing ratio of Facey Group arising from the refinancing.
Later, he told Wednesday Business that Facey's private ownership made requests on its financials unreasonable. Paul B. Scott is chairman, chief executive officer and principal shareholder of the Musson Group, the parent of Facey Group. The group was formerly chaired by the late Desmond Blades.
In 2001, Facey entered into a key business relationship with then start-up Digicel, currently one of the largest regional mobile telephone providers. That same year, it established PBS after Facey Commodity acquired the Jamaican operations of international document and printing company, Xerox. Since then, PBS has expanded across the Caribbean and Central America, setting up companies with different names in Barbados, Belize, Aruba, Curaçao, the Dominican Republic, Guatemala, El Salvador and Costa Rica.
"Facey leveraged its procurement, distribution and logistics infrastructure to begin distributing telecoms devices and prepaid mobile airtime in Jamaica," the company stated on its website.
The Facey Group emerged out of C.B. Facey & Company in 1930, representing DuPont, General Motors parts division, ICI Paints, Black & Decker and Andrews Liver Salts, among other multinationals.
Full Caption: Bruce Bowen (left), president and chief executive officer of Scotiabank Jamaica, presents Dr Nigel Clarke, chief executive officer of Facey Commodity Company Limited, with a plaque in appreciation of a loan for US$182 million arranged by Scotia Investments and obtained by Facey Group. Occasion was an awards ceremony at Scotiabank financial centre, Constant Spring Road, St Andrew, on Monday. Looking on are Lissant Mitchell (second right), chief executive officer of Scotia Investments, and Berisford Grey, senior vice-president at Scotia Investments. - Rudolph Brown/Photographer