Lee-Chin’s coffee investco to raise $1.9b for debt refinancing
Published:Friday | December 17, 2021 | 7:09 AM
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Specialty Coffee Investments Company Limited, SCICL, which is connected to investor Michael Lee-Chin, is raising funds on the market to refinance $1.9 billion in debt as part of its support for leading subsidiary Mavis Bank Coffee Factory Limited....
Specialty Coffee Investments Company Limited, SCICL, which is connected to investor Michael Lee-Chin, is raising funds on the market to refinance $1.9 billion in debt as part of its support for leading subsidiary Mavis Bank Coffee Factory Limited.
Lead arranger of the transaction, VM Wealth Management, said the net proceeds will refinance an existing SCICL note maturing on December 22, 2021.
The coffee industry, which was faced with a depressed world market for beans after the pandemic emerged in March 2020, is once again seeing increased demand, which in turn has resulted in higher production year-on-year. The higher demand resulted in large producers paying nearly double for a box of coffee from farmers supplying beans – coming from a low of $4,000 last year to more than $7,500, the Financial Gleaner understands.
AIC Barbados Limited, which is also controlled by Lee-Chin and is the ultimate parent company for SCICL, will act as the guarantor for the new bonds. Messages to Mark McIntosh, an executive director at SCICL, went unanswered up to press time.
The notes on offer from December 17 to 22 will be issued in two tranches: paying 9.75 per cent for up to $500 million in tranche A; and 7.25 per cent interest for up to US$8.7 million for tranche B, according to the offer documents.
The offer is for high net worth investors earning over $10 million a year. Investors are required to purchase in minimum blocks of $1.0 million.
Mavis Bank, one of the largest producers of Jamaica Blue Mountain coffee, has been in operation for over 90 years and has long-standing trading relationships with Asia, Europe and North America. Its green beans carry the factory’s name, while its roasted beans are branded as Jablum.
SCICL acquired the coffee company in 2016 from joint-venture partners Jamaica Producers Group and Pan-Jamaican Investment Trust, now renamed PanJam Investment, for $1.3 billion. To finance the acquisition, SCICL then raised $1.8 billion at 9.5 per cent interest.
The proceeds of the original notes in 2016 were “used to settle debentures issued by the company in favour of JP Tropical Group Limited and Scotts Preserves Limited, arising from the acquisition of MBCF”, as well as for working capital and capital expenditure, as was said by the arranger of that transaction, JMMB Investments.