Updated: 24-12-2024 - 12:00PM 9 2 CLOSED
Mar 16, 2016
Group CEO of GraceKennedy Ltd (GK) Don Wehby said Monday that the company is in the preparation phase prior to a possible bond issue for the financing of its new downtown Kingston project.
It is targeting a portion of the amount required to undertake the construction of the new corporate centre in the area.
The new GK headquarters — to be completed at a cost of around US$25 million and slated for completion in 2017 — is being constructed on a 48,000-square-foot plot of land acquired from the Urban Development Corporation (UDC). It is intended for housing of GK business units with space for rental for offices and retail enterprises when completed. The plan is centred on land located in a zone identified as suffering from urban blight.
Incentives provided by the Government for the development of such areas include tax exemptions on bonds under the Urban Renewal Act.
“Our finance team is currently working to determine the most appropriate financing structure and solution for this development in order to effectively maximise savings and minimise financing cost,” Wehby stated.
He said that GK’s investment subsidiary, GK Capital Management Limited, has been working with the GK Finance team “to ensure that we not only meet our strategic financing objectives — but that those objectives are aligned with our overall project goals. As such, we are exploring all options, including the issuing of an Urban Renewal Bond.”
The group CEO was upbeat about the bond, which by name and nature is accompanied by a tax waiver. However, his optimism comes against the background of a general slow-down in such grants in recent years under an International Monetary Fund (IMF)-controlled regime.
“The tax incentives available under the Urban Renewal (Tax Relief) Act (URA) are available to people or entities that have been approved by the Minister of Finance to carry out improvement works in a special development area upon submission of a prescribed application. The application process is administered by the Urban Development Corporation (UDC), which has responsibility for ensuring that each application satisfies the requirement of the URA,”Wehby asserted
“We were previously successful with our application for GK Foods & Services Ltd (GKF&S) which benefitted from the tax incentives available under the URA in 2009 when we constructed our Distribution Centre at Salt Pond Road in Spanish Town,” he added.
He noted that through the URA incentives GKF&S was able to effectively manage its overall construction cost, as it was able to claim certain tax credits against future tax payables.
Additionally, he stated that the subsidiary’s financiers were relieved from paying tax on the interest payments received from the loan granted to GKF&S, which allowed for competitive pricing.
This URA expired in September 2015 , but Wehby also anticipates that it will be renewed.
“Given the direct influence between nation-building, economic growth and the development of urban areas generally, and downtown Kingston in particular, we think it is important that the Ministry of Finance and the UDC move expeditiously to have the URA renewed,” Wehby outlined.
Wehby said listing a bond on the corporate bond market of the Jamaica Stock Exchange is one of the options being considered by GK, but he did not specifically say that the new urban renewal bond would be the subject of such a listing.
Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter
Jamaica Observer
Wednesday March 16, 2016
http://www.jamaicaobserver.com/business/GK-prepares-to-launch-_54658