SAGICOR Financial Company announced last week that a subsidiary had issued a notice of redemption for the US$188 million balance of 8.875 per cent senior notes due in 2022.
In a news release, the company said it expects the 2022 notes will be redeemed on August 11, 2021, in accordance with the terms of the agreement governing the 2022 notes.
The notes will be redeemed at an aggregate redemption price of approximately US$188 million, which is 100 per cent of the remaining principal amount of the 2022 notes being redeemed plus accrued and unpaid interest.
Sagicor said the US$188 million is expected to be funded from the proceeds of a US$400 million debt offering the company closed on May 13. The US$400 million offering has a term of seven years and is due on May 13, 2028.
The new US$400 million debt was issued at 5.30 per cent, substantially less than the 8.875 per cent debt that is being redeemed.
In its investor presentation for the quarter ended March 31, 2021, Sagicor said: “There is a material decrease in the company’s debt cost of capital as the new US$400 million bond was issued with an interest rate reduction of over 350 basis points (3.50 per cent), a decrease of US$7 million in annual interest expense.”
The proceeds from the US$400 million offering were also used to repurchase approximately US$130 million principal amount of the 8.875 per cent notes in May 2021, Sagicor said.
Of the US$400 million raised last month, Sagicor said it expects to retain approximately US$70 million of net cash proceeds to be used for general corporate purposes.
“We are pleased with the outcome of this new note issue and appreciate the strong support by debt investors,” said Dodridge Miller, Sagicor’s group president and CEO, in a news release in May.
“The completion of this refinancing at significantly improved terms than our prior note issue provides an immediate and meaningful improvement in our overall cost of capital. It is also a validation of Sagicor’s strategic plan and an important addition to our long track record of successfully accessing capital to support our growing business.”
The notes were given a rating of BB+ (stable) by S&P Global Rating Services and BB- (stable) by Fitch Ratings, Inc.
The global coordinators and joint-book-running managers for the US$400 million notes were JP Morgan Securities and RBC Capital Markets with Jamaica Money Market Brokers and Sagicor Investments Jamaica as joint book runners.