Air Jamaica has successfully raised US$200M in the international capital markets. On Tuesday, June 28, Air Jamaica launched and priced an issue of 9.375% Notes which will mature in 2015. This inaugural issue from the airline is based on a guarantee from the Government of Jamaica. The Notes are to be repaid in 14 equal semi-annual installments after a 3-year principal grace period and have an average life of 6.75 years. The Lead Manager for the transaction was Bear, Stearns & Co. Inc.
The transaction was announced with an initial size of US$150 million and price guidance in the 9.50% range. Based on a strong response from investors, the final transaction was increased to US$200 million and priced at the lower end of the interest band, for a final yield of 9.375%. The issue was oversubscribed and had a final order book of more than US$400 million from 137 different accounts across the U.S., Europe and Latin America. This transaction represents the debut offering for Air Jamaica in the international capital markets. It comes on the heels of the Government of Jamaica’s recent successful placement of its new 10-year benchmark notes due 2015, also lead managed by Bear, Stearns.
Dr. Vincent Lawrence, Air Jamaica’s Executive Chairman and Chief Executive Officer, says “raising this capital is a key element in our financial restructuring and will provide the necessary support to help Air Jamaica maintain its position as the region’s premier airline.” He says the proceeds from the Notes will be used to refinance short-term debt, significantly extending the average life of the company’s liabilities, as well as to fund capital expenditures and bolster its working capital position. According to Dr. Lawrence the team can now focus its full attention on its operations and enhancing its customer service.
Financial Secretary in the Ministry of Finance, Mr. Colin Bullock attributed the offering’s success to Bear, Stearns’ ability to once again capitalize on the recent positive investor sentiment towards the Jamaican credit story, in which solid credit indicators have been steadily improving over the past year. “The Government of Jamaica is absolutely committed to supporting the existence of the airline and bringing it to profitability,” stated, Mr. Bullock.
Bear, Stearns says the success of the transaction validated its belief in Air Jamaica and the Government of Jamaica and would not have been possible without the significant commitment of the company’s team, which acted in a first class and professional manner throughout the process.
