Pulse pays off bond, banks on Villa Ronai cashflow this year
Modelling agency and entertainment venue-turned-real estate-developer Pulse Investments Limited has paid up a $250 million debt to bondholders four years early from a funding source that the listed company is not yet disclosing and which is not reflected in its last published financials to September 2020.
The bond settlement was made on December 14, 2020, exactly a year after the proceeds were disbursed and four years before its maturity date, and disclosed to the Jamaica Stock Exchange, where the security trades.
The bond funds were used to retire more expensive debt and to complete extensive refurbishing of the Pulse-operated Villa Ronai property in Stony Hill, St Andrew. Some of the money was also used to do preliminary work on a 30-unit Pulse Homes housing project at the Stony Hill property. The first 15 of these are expected to be completed next year
Early bond repayment is usually done where a liquidity crisis arises for the bond originator or its default rate rises above an acceptable level for the borrower.
Pulse Executive Chairman Kingsley Cooper says that the decision was made entirely by Pulse with only the standard notice to bondholders of its intention to repay early.
“It was Pulse’s assessment that early repayment was the correct course of action in light of the company’s immediate plans for growth and expansion,” Cooper told the Financial Gleaner.
He declined to speak on the financing arrangements for the early repayment. “Such an arrangement will be indicated in due course,” he said.
Pulse ended the three months to September 2020 with assets of $4.9 billion, of which only $72 million was cash. In addition to the bond, the company was, at the time, carrying a related party debt of $271 million. That financial position would be inadequate to pay out the bond.
Pulse is looking to turn on a fresh flow of revenue from the opening of its Villa Ronai lifestyle villages during the first quarter of this year. From the development of 68 guest suites there, the company had hoped to generate approximately US$2.5 million, or just about $358 million, in annual revenue, based on pre-COVID assumptions of an occupancy rate of 70 per cent in the first year.
That target has been revised downward to US$1.3 million, or $186 million, with expectations of up to 50 per cent occupancy over the first year.
“Given COVID, Villa Ronai Lifestyle Village will not just be guest suites for overnight stays anymore. There will be a limited number of those as well as function spaces for small gatherings in a socially distant environment to which Villa Ronai lends itself and which allows for full COVID-19 protocols,” Cooper explained a change in the business model considering the times.
Sale and rental of the Pulse Homes houses are expected to come on stream in 2023.
Despite disruptions from the COVID-19 pandemic, Pulse has reported that both revenues and earnings are intact. For the quarter ending September 2020, Pulse produced profits of $301 million on revenues of $166 million, with fair value appreciation on investment property of $190.3 million factored in.
Pulse’s core activity is the promoting of talent in the fashion and entertainment industry, but over the years, the company has expanded into television, event production, and real estate.