Stanley Motta restructures debt with DBJ, ends payment plan with tenants
Stanley Motta Limited, the owner of the 58HWT tech park in Kingston, has come out of negotiations with more breathing room on financial obligations to creditor Development Bank of Jamaica, DBJ, as a safeguard against the disruptions caused by the coronavirus.
The company, which operates five buildings at the tech park, with centre operator Alorica its largest tenant, in April announced that it was working on payment plans with tenants and had pushed back capital projects planned for this year to 2021 in light of revenue fallout from the COVID-19 pandemic.
By June, all rent-deferment periods resulting from the COVID economic shock ended for its tenants, and now, Stanley Motta is reporting that close to 100 per cent of the occupied space is being paid on time and in full.
Even before Alorica’s call centre operation came under scrutiny by the Ministry of Health and was later ordered close for cleaning and inspection in efforts to reduce the spread of COVID-19, Stanley Motta had entered into talks with its lender, DBJ, to seek reprieve.
“We initially reached out to the DBJ when the pandemic started. As always in these situations, it’s extremely important to make sure that when there is uncertainty, you manage your debt. On further investigation, it turned out that there had been a billing error that we had both missed. Because we had overpaid, they offered us a 17-month moratorium on principal payments, which we took,” Chairman and CEO Melanie Subratie told the Financial Gleaner following the company’s annual general meeting on Friday.
Stanley Motta borrowed US$5 million at 4.5 per cent interest from the DBJ in March 2016 for the purpose of constructing new buildings and reconfiguring existing buildings to create approximately 132,000 square feet of business process outsourcing space at 58 Half-Way Tree Road in Kingston.
The loan is secured by a mortgage over the real estate and has a tenure of 20 years.
The moratorium received by Stanley Motta runs to October 2021. The company booked $35.2 million in foreign exchange losses in the June quarter, arising from the revaluation of its DBJ loan.
The company grew revenue in the quarter by nearly nine per cent to $112.6 million, mainly attributable to the depreciation of the Jamaican dollar, but net profit shrank by nearly a half from $44.7 million to $29.3 million.
At half year, Stanley Motta’s long-term debt stood at $776 million, compared to $709 million at the end of June 2019.
“With our revenue line solid right now, we reduced our debt payments already this year, but I feel like we should not sit on our laurels. We continue to look at every square inch of the property to see how we can increase our revenue. We have some plans, which I am unable to share at this time, but will share when I feel they are ready,” Subratie said.
The company says it is creating a development plan for all underutilised space on the 58HWT complex, which spans 213,000 square feet. Alorica currently occupies 162,585 square feet in the tech park.
The second-largest tenant is general insurance company General Accident, and Stanley Motta also has a lease agreement with Transactions E-Pins Limited. All three companies are members of the Musson Group.