138 Student Living seeking $2.15b from APO
The 138 Student Living (Jamaica) Limited (138SL) is seeking to a raise a minimum of $2.15 billion in a second-round capital raise.
The company, in its prospectus for an additional public offering (APO), posted on the Jamaica Stock Exchange (JSE) website inviting both existing shareholders and the general public to subscribe for a minimum of 513,972,784 ordinary shares.
Some 318,515,000 shares have been allocated for reserved share applicants including existing shareholders, 138SL team members, and strategic partners at a value of $4.05; while 195,457,784 has been allocated for the general public at $4.40.
The 138SL, however, has the option of upsizing the offer and should it choose to do so, will increase shares allocated to the general to 256,986,392.
The APO, which is being brokered and arranged by GK Capital Management Limited, will open September 8, 2023, and is scheduled to be closed on October 8.
Proceeds from the APO will be used “to further shore up the future of 138SL and ensure that we continue to be ‘the Caribbean’s premier provider of university housing’,” according to 138SL Chairman Ian Parsard, who added: “The first step in that future plan is to optimise the company’s capital structure.”
In particular, the new capital will help to reduce the company’s debt which stands at $4.2 billion, increase cash flow to ensure more regular payments of dividends, and to support any further projects.
With occupancy levels at 138SL-managed properties now around 93 per cent, the company is considering strengthening its partnership with The University of the West Indies (UWI), Mona, through another build-operate-transfer agreement which will see it constructing more rooms for student accommodations and increasing the housing stock by 60 per cent.
“The group currently operates a total of 1,464 rooms at four locations on The UWI, Mona Campus. Under the current concession agreements, the capacity exists to build another 842 rooms,” Parsard stated in the prospectus.
At present, 138 SL manages 432 rooms on the Leslie Robinson Hall and 576 on the George Alleyne Hall. Its subsidiary, 138SL Restoration, has to date renovated 72 at the Gerald Lalor Flats and 384 on Irvine Hall.
“There is also the opportunity for us to grow, both regionally and internationally, and to further grow our short-term rental business revenue stream, which we have only just begun to explore. 138SL will undoubtedly benefit from the increased capital raised by this APO that will further support execution on our strategic value-creating initiatives,” CEO Cranston Ewan added.
For the nine-month period ending June 30, 2023, 138SL increased its revenues to $1.05 billion or by 17 per cent when compared with the corresponding period in 2022. The company attributed this improvement to an uptick in occupancy due to the return of face-to-face classes at The UWI, Mona and the roll-out of its short-term rental scheme marketed to international groups visiting Jamaica for sports, academia and business conferences.
Net profit for the period under review increased by 13 per cent to $270.06 million.