Marcella Scarlett, Business Reporter
NCB Capital Markets has raised J$500 million of capital adventure company Mystic Mountain via private placement of 100 million preference shares.
The offer was open for one month and closed early October. Take was mainly by institutional investors, who were allotted shares on a 'first come first served' basis.
The prefs, which mature in five years, will pay interest at 10.5 per cent per annum
Most of the funds raised are to be used to refinance existing debt, the broker said. The rest will be used to expand and upgrade the property and to boost the company's working capital.
Assistant vice-president at NCB Capital Markets, Dylan Coke, said the original debt was denominated in US dollars and is being refinanced to manage debt-servicing cost, specifically to benefit from the movement of the US dollar against the Jamaican currency.
"Separate from bringing down the cost of servicing it was a kind of currency play — if you can call it that," said Coke.
"If you borrow some Jamaica dollars and you earn US dollars then your ability to pay back that Jamaican dollar gets better every day," he said.
The Jamaican dollar has depreciated by 13 per cent since the start of the year to more than J$105.
"In doing fundraising for clients, we always seek solutions that are tailored for their specific needs, and in Mystic's case we noticed that, given the nature of its business, although it has substantial assets in terms of buildings, infrastructure and installed rides or equipment, it doesn't hold large amounts of fixed assets like land on its books, which many borrowers use as security," Coke said.
"In fact, the land from which Mystic operates is leased long term from the Government. Bearing that in mind, we looked for a solution that didn't require that kind of security but would provide investors with many of the features of debt - fixed tenor, fixed coupon - and then reinforced it with a sinking fund facility to give investors comfort that they would be repaid," Coke said.
The recent success of the JMMB preference share issues inspired NCB Capital to go that fundraising route, Coke told Sunday Business. Mystic Mountain, also referred to as 'Jamaica Park', is operated by Rain Forest Adventure. The facility spans a 100-acre site located just outside of Ocho Rios.
The park offers three main attractions: a chairlift called the Rainforest Sky Explorer, the Rainforest Zip-line Tranopy Tour, and Rainforest Bobsled Jamaica.
"Mystic has been consistently profitable since inception and currently enjoys net margins in the region of 16 per cent," Coke said.
The company opened for business in 2008. It hosted more than 100,000 visitors last year, up from 90,000 in 2011, said Coke.