Bondholders want percolated interest on Specialty Coffee bond
Published:Sunday | May 26, 2024 | 12:05 AM
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Specialty Coffee Company bond met with the JCSD in the past week to discuss their demands ahead of a vote to extend a bond issued by the coffee investment company, an entity connected to businessman Michael Lee-Chin. “The trustee received a request...
Specialty Coffee Company bond met with the JCSD in the past week to discuss their demands ahead of a vote to extend a bond issued by the coffee investment company, an entity connected to businessman Michael Lee-Chin.
“The trustee received a request for extension from the issuer,” said Andrea Kelly, general manager of Jamaica Central Securities Depository in response to Financial Gleaner queries.
The issuer wants to extend repayment to ‘October 2025’, according to correspondence issued by JCSD to the coffee company’s creditors and seen by the Financial Gleaner. It would be the second extension of the bond, which matured last December. Bondholders had previously agreed to an extension to April of this year.
Kelly, once again, did not disclose the precise concerns.
“The bondholders have instructed the trustee to make certain demands of the issue before they can consider an extension,” she said.
However, one holder of the bonds indicated that they are seeking higher yields until they get back their principal investment.
“The bondholders requested a higher interest rate and access to the company’s financials,” said a source. “Some of the bondholders were requesting as much as 15 per cent interest.”
A response from the issuer, Specialty Coffee, via JCSD Trustee is being awaited prior to the vote for the second extension, the person said.
Specialty Coffee has not responded to requests for comment. Questions sent to director Mark McIntosh were unanswered on Friday. McIntosh is also a top executive at Wallendford Estate and Mavis Bank Coffee, the underlining coffee companies within the holding company.
In 2021, Specialty Coffee issued a bond to refinance $1.9 billion in debt, split between a local currency bond of up to $500 million at 9.75 per cent interest and a US$8.7 million tranche at 7.25 per cent interest. This replaced the original bonds from 2016, which raised $1.8 billion at 9.5 per cent interest, used for acquiring Mavis Bank Coffee Factory for $1.3 billion and meeting working capital needs.
Specialty Coffee acquired Mavis Bank in 2016 from Jamaica Producers Group and Pan-Jamaican Investment Trust. Mavis Bank, a major producer of Jamaica Blue Mountain coffee, has been operational for over 90 years, maintaining strong trading relationships with Asia, Europe, and North America. The factory’s green beans carry its name, while roasted beans are branded as Jablum.