Aug 2011 Financial News

NCBCM brokers J$3b wastewater bond offer

Aug 03, 2011

National Water Commission has hired NCB Capital Markets Limited (NCBCM) as lead broker/arranger to raise US$37 million of debt guaranteed by the Government of Jamaica as funding for the water monopoly's new subsidiary, Central Wastewater Treatment Company (CWTC).

The US$37 million (J$3.18 billion) debt is to be raised through private placement of three bonds.

NCBCM will underwrite US$30 million of the deal.

"This capital will put CWTC in a financially sustainable position and forms part of the overall repositioning of the National Water Commission to expand its services and improve the quality," said Minister of Water and Housing Dr Horace Chang, speaking at the signing ceremony on Tuesday at NCBCM offices in New Kingston.

The majority shares of CWTC was acquired by the National Water Commission in June 2010. The agency provides both water and sewerage services.

CWTC operates the Soapberry Treatment Plant which adjoins Hunts Bay in Kingston. The plant is an integral part in reducing raw sewage output into Kingston Harbour as it treats wastewater collected from a significant portion of the Corporate Area and St Catherine customers of the water commission.

Investment

Chang said investment in excess of US$1 billion has been earmarked over the next 10 years for the repositioning of NWC.

"We not only want to ensure that we have the kind of facility that we can take pride in, but also to provide the level of efficiency that we want to see," said Chang.

"We intend to increase production levels, and to take water to the wider rural areas."

The CWTC US$37 million debt will refinance US$37m of loans previously issued through the corporate banking unit of National Commercial Bank, NCBCM's parent. The new placements will be in in three tranches: a four-year bond at fixed coupon rate of 7.75 per cent; a second for six years at 8.125 per cent; and the third for eight years at 8.25 per cent.

Interest on the notes will be paid quarterly on the offer, which opened August 2 and closes August 12.

"We always have a pool of investors to tap and already we have identified some investors who will be taking part in it," said Herbert Hall, manager of corporate solutions unit at NCBCM.

The offer is open to 'accredited investors', that is, individuals whose net worth exceeds J$50 million, or one whose income before taxes is in excess of J$10 million in each of the past two calendar years.

In the case of an entity, its net assets must be in excess of J$250 million as reflected in its audited financial statements for its most recently completed fiscal year.


Source:
sabrina.gordon@gleanerjm.com
Jamaica Gleaner
Wednesday August 3, 2011

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