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Ja Energy Partners to raise capital through JSE

Published:Friday | March 7, 2014 | 3:00 AM
CEO of Jamaica Energy Partners, Wayne McKenzie (left), affixes his signature to the mandate letter appointing First Global Financial Services as investment banker for the energy company. FGFS president Steven Whittingham is at right. - Contributed Photo

Avia Collinder, Business Reporter

Jamaica Energy Partners (JEP), a foreign-owned producer of electricity, is about to tap the Jamaican market for capital and has hired First Global Financial Services (FGFS) as investment bankers.

First Global has declined to say the nature of the fundraising to be done for JEP, only that it aims to tap local and international sources. However, the Financial Gleaner received confirmation on Thursday that JEP hopes to raise funds via the Jamaica Stock Exchange and is awaiting regulatory approval to launch its offer.

"The JSE has reviewed a draft of the prospectus," said JSE General Manager Marlene Street Forrest, who declined comment on whether the company would be floating a bond or going public through an initial public offering.

"We are not at liberty to disclose the content of the document. Only when the company's prospectus is duly approved and registered by the Companies Office and Financial Services Commission, respectively, would the exchange be at liberty to disclose the content," she said.

Typically, when local companies hire investment bankers, they are preparing to go public. However, the JSE now operates a bond platform, and a bond issuer does not have to be otherwise listed to float debt on the exchange, Street Forrest confirmed.

"That is the beauty of the bond market," Street Forrest said.

FGFS Chief Executive Officer Steven Whittingham said JEP has hired his firm to evaluate capital market financing options.

"We will be advising JEP on how best to maintain the stability that they have exhibited over the years and how to position the company for future growth." Whittingham told the Financial Gleaner.

"At this point in time, we are not in a position to comment on any specific instruments. We readily acknowledge, though, that given their leading position in the local energy sector, there will be substantial demand for any potential products that may come to market," he said.

Jamaica Energy Partners began operations in 1995 and is currently the largest independent power provider in Jamaica, producing close to 30 per cent of the electrical energy on the Island's power grid under contract to the Jamaica Public Service Company. The company employs 189 permanent staff.

Wayne McKenzie, CEO of JEP, was said to be travelling abroad and did not reply to email queries as to whether funds were needed to retire more expensive debt or to start new projects, and if JEP was contemplating listing on the Jamaica Stock Exchange.

The company recently completed the West Kingston Power Partners (WKPP) 66-MW power plant, which is fired by heavy fuel oil but convertible to LNG.

The expansion was financed through private equity firm and JEP parent Conduit Capital Partners which sponsored a US$95-million syndicated loan, for which the International Finance Corporation (IFC) was lead arranger, as reported by the Latin American Private Equity and Venture Capital Association (LAVCA). The total project cost was estimated at US$127 million at start.

Conduit Capital, which focuses on energy infrastructure investment and development in Latin America and the Caribbean, said that the thermal power plant would initially run on oil but could also be fitted to run on natural gas.

In June 2009, Conduit bought the Jamaican assets of JEP back from Basic Energy, a privately owned group with its concentration of assets in the Dominican Republic; this after selling it in 2007.

The transaction between Conduit and Basic Energy included 100 per cent ownership of JEP with rights to an expansion in Jamaica for 66 MW of capacity; 55 per cent ownership in Pedregal; and a 55MW thermal power generator in Panama.

JEP and its sister company WKPP represent combined capacity of 190MW, according to the joint JEP-FGFS press release issued on March 4.

"We feel very fortunate to have the support of a strong Jamaican financial institution which not only understands our core business, but is prepared to help us find innovative ways to fortify the capital structure of the company," McKenzie said in the release.

FGFS sees corporate finance services as a growth area for the company, which said it structured deals worth more than $2 billion in 2013.

The investment company is ultimately owned by conglomerate GraceKennedy Limited.

avia.collinder@gleanerjm.com