Jamaican Teas fell short of its target to raise $200 million through an issue of corporate bonds.

The company got $104 million from the bond issue, which closed last Thursday, but the shortfall may result in a delay in the completion of phase two of the Orchid Estate development in St Thomas.

“We will now have to decide on three options to move forward”, said John Mahfood, chief executive officer of the company.

The company might not pay down as much of the loan that it had originally planned to, while the $63-million purchase price for Orchid Estate may be partially financed through the banks or by the proceeds from the sale of houses to be redeveloped under phase one of the project.

H Mahfood and Sons Limited, a subsidiary of Jamaican Teas, will continue with the plan to begin to redevelop 29 houses to be on the market between March and April next year. But it may begin building the remaining 42 houses by August, five months later than it had first planned.

“It’s not going to be a major problem for us,” said Mahfood.

Jamaican Teas also planned to pay off a $45-million margin facility at Mayberry Investments and a $28-million overdraft facility.

Mahfood figures that the shortfall in the amount raised was as a result of investors’ uneasiness in investing over the long term.

“The big investors wanted to hold their funds because of uncertainty about the interest rates,” he told the Business Observer, adding that the rate of 8.5 per cent that the bonds carried didn’t seem as attractive as it did three or four months ago.

The bond’s interest rate is fixed at 8.5 per cent per annum for the first two years after its issue, after which it changes to a variable rate equivalent to 2.5 percentage points above the average yield on six-month treasury bills.

The tea maker, supermarket operator and real estate company will list the debt instruments on the Jamaica Stock Exchange (JSE) through which investors can trade the bonds.

The company has done fairly well financially since it listed its ordinary shares on the JSE three years ago — sales grew from $452 million for the year ended September 30, 2010 to $825 million last year, and for the nine month to June 30, 2013, it was up by 34 per cent, from $582 million in the corresponding period in 2012 to $783 million.

Jamaican Teas says it controls approximately 50 per cent of the local tea sales, while its Caribbean Dreams line of herbal teas has grown from scratch to becoming the market leader in the herbal tea market in Jamaica.