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Sagicor X Fund to raise $4b from rights issue

Published:Tuesday | August 4, 2015 | 4:56 PM

Sagicor Real Estate X Fund Limited plans to raise $4 billion under its rights issue to finance its purchase of a convention hotel in Florida.

Owners of the real estate company will be offered an additional share for every 2.5 shares held - a total of 598,134,700 units - at a price of $6.95. The offer discounts the stock by 13 per cent relative to its trading price of $8 per share on Monday. The share price rose to $8.02 on Tuesday

Sagicor X Fund is buying the Doubletree hotel in Orlando, which features 742 rooms and more than 60,000 square feet of conference and meeting space. The deal with Blackstone Group is to be wrapped up in September and the rights issue is timed to meet that deadline. The offer to X Fund shareholders on record as of August 17 will open on August 19 and close September 2.

The Jamaican company said last week that it plans to finance the Orlando hotel acquisition with equity and debt, but has not disclosed the buy price. The $4.16 billion to be raised under the rights issue translates to US$35.4 million at current exchange rates.

The convention hotel will be Sagicor X Fund's second hotel purchase from Blackstone, following its US$85 million acquisition of the 489-room Hilton Rose Hall hotel in Montego Bay that was finalised in January.

That Hilton hotel will eventually be rebranded a Jewel resort, which is Sagicor's proprietary brand. Sagicor is reportedly weighing a long-term plan to expand the hotel.

Sagicor X Fund is planning to enter other market segments, but tourism will remain its top earner. The four hotels in its portfolio generated revenue of $2.3 billion between January and June, amid total revenue

of $2.8 billion. Its newly released quarterly earnings report indicated that X Fund made $117 million of profit in the second quarter and $687 million for the full half-year ending June 2015. That compares to $168 million and $410 million, respectively in the comparative 2014 periods.

Its assets are valued at $21 billion, compared to $8.8 billion a year ago.