DUNCAN...we want to be able to have some level of predictability.
JMMB Group gets pref share extension
JMMB Group Limited (JMMBGL) has received an extension from its preference shareholders to extend the maturity date of two preference shares by an extra six years.
This was confirmed on Monday when JMMBGL held its two general meetings at The Summit (formerly Knutsford Court Hotel). At the JMMBGL7.25C meeting, 97.80 per cent of the votes cast by preference shareholders was in favour of amending the terms while 95.94 per cent of the votes cast at the JMMBGL5.75C meeting was in favour of amending the preference share terms.
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As a result of this approval, JMMBGL5.75C will now have a maturity date of March 2031 with a new fixed interest rate of 7.50 per cent with the United States dollar preference share dividends to be paid quarterly. With respect to JMMBGL7.25C, the new maturity date would be March 2032 with a fixed interest rate of 10.00 per cent between March 2025-March 2026 before the preference share becomes a variable rate instrument again. The preference share would reset every March 6 with a new reset rate, which would be calculated as 250 basis points (2.50 per cent) plus the GOJ’s (Government of Jamaica’s) 180-day weighted average treasury bill yield (WATBY), subject to a floor of 6.00 per cent, which means that the reset rate can never go below that rate. This Jamaican dollar preference share pays preference dividends monthly.
“One has to have some level of ability to forecast, and when we’re forecasting in terms of where we see debt servicing in relation to our overall revenues, we want to be able to have some level of predictability. On the US side, where the market is and where other offers are, this is very competitive and compelling. You have to take the market into account in relation to where you price your offers because you as investors can always look and evaluate the market and determine where you get your best returns. When you have a fixed rate, you can predict and manage your business in relation to your interest costs and for the longer duration, this supports tier two capital having a longer duration within your overall capital structure,” said JMMB Group Chief Executive Officer Keith Duncan.
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These new terms will go into effect on March 5, a day before the preference shares were set to mature. March 6 will also mark the last day of the temporary suspension (February 18-March 6) in trading of the 2018 preference shares which was requested by JMMBGL to facilitate the general meeting on the two preference shares and prepare the payout for the other two preference shares which will mature. JMMB Group will pay out $64.35 million related to JMMBGL7.00NC while it will payout US$310,000 (J$48.40 million) in relation to JMMBGL5.50NC. Also, preference dividends on JMMBGL7.25C, JMMBGL5.75C and the other two preference shares will be paid on March 6.
This marks JMMB Group’s second preference share extension in two years. JMMB Group extended two preference shares to January 2030 with JMMBGLUSD6.00 being adjusted from 6.00 per cent to 8.50 per cent while JMMBGL7.50 became JMMBGL9.50. The rate adjustment on the USD preference share resulted in JMMBGL paying an extra US$1.07 million ($166.98 million) per year to preference shareholders. JMMB Group benefited in January when the JMMBGL9.50 rate was reset from 9.50 per cent to 8.56 per cent for the next year. This will result in JMMBGL paying $17.18 million less in preference dividends over the next year.
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The adjustments approved on Monday will see JMMB Group paying an extra US$744,275 per year in preference share dividends going forward. JMMB Group will pay an extra $14.42 million in preference share dividends on JMMBGL7.25C between March 2025-March 2026 before it resets which might see JMMB Group paying more or less to owners of that preference share.
When Duncan was asked about the possible extensions in 2032 when JMMBGL7.25C is set to mature, he said, “There’s a lot of time between now and 2032. We’ll evaluate the options as we go forward. At that point in time, we could be in a different world. We could say that we want to pay this out, as well as we could say let us extend once again. As we have done our market read, and they would like to extend the terms of this offer, if we’re at that point and we determine that we want to roll over and we see there’s significant interest, we will roll over, but if there’s no significant interest, then we wouldn’t roll over and we could choose to do something else.”
JMMB Group’s next preference share maturity will be in March 2028 when JMMBGL7.15 and JMMBGL7.35 mature with face values of $9.62 billion and $115.49 million, respectively. Both have an issue price of $3.
In order to appease the concerns of some preference shareholders who would want to receive their principal, JMMB Group chairman Professor Archibald Campbell asked persons present to provide their details to the different JMMB representatives present. He noted that a list/order book would be compiled to match persons who want to sell their investment with persons who want to buy into the preference shares with the new terms. He also noted that preference share owners who go through this arranged process directly with the JMMB team might benefit from having the commission waived on the trade.
Both preference shares should be trading again on Friday March 7 which might create an opportunity for some investors to sell above the par values of $2 and US$2.
Sygnus Credit Investments Limited (SCI) will also have two preference share maturities in December. SCIJMD10.5C will mature at $100 with a $1.6 billion face value while SCIUSD8.00D will mature at US$10 with a US$16.78 million face value. Eppley Limited’s 7.25 per cent preference share will mature in August 2026 at $20 with a face value of $600 million while SCIUSD8.50E will mature in December 2026 at US$10 with a face value of US$23.22 million.
