Express Catering has upsized its bond offer to US$12 million! What are they gonna use the money for?

So Express Catering is looking to raise US$12 million through a bond offering. 

Remember a bond is like a loan to the company. You, the investor, agree to lend your money to Express and Express agrees to pay you interest.  Then at the end of the loan term, you get all your money back, plus you get to keep the interest.

The interest rate on the bond is set at 8.5%  It matures in three years, so 2027. The minimum purchase is US$100 which is just under J$16,000.  You can buy more in increments of US$100.

The offer opened on February 8 and is scheduled to close on March 8, but as I said before, they’ve already upsized the offer due to overwhelming participation. The company was originally aiming to raise US$10 million.  They’ve upsized to 12.

So what do they need US$12 million for? 

Well, according to the prospectus, US$8.5 million will be used to repay a loan from Sygnus Credit Investments, which becomes due in 2025.

The remainder will be used to finish building the food court at Sangster International Airport. 

Express is the sole food and beverage provider at Sangster. So even though there are different food brands, DQ, Wendy’s etc, they’re all run by Express Catering.

According to the prospectus, the company recently recorded their highest revenue ever of US$21 million. The company said that was thanks to increased passenger traffic, fueled by more lounge accessibility and a proactive approach to cost management.

Express noted that refinancing the Sygnus loan will significantly reduce their interest expenses, giving them the financial flexibility to execute their expansion. 

These initiatives include the opening of new brands such as Freshens and Bento Sushi this year, with plans to introduce licensed brands like Auntie Anne’s and Cinnabon to broader audiences in the future.

The company also plans to expand its footprint as a food and beverage concessionaire in other local and regional airports. 

Financially, ECL has had a strong performance.  Second-quarter revenue grew by 23% to just over US$5 million, and net profit increased by 47 % to US$187,000. 

The lead broker for the bond is Mayberry Investments and the co-broker is Sygnus Capital.

ECL plans to list the bond on the Jamaica Stock Exchange’s Bond Market, potentially becoming the first USD-denominated bond to be admitted to trading.

And that’s the bottom line.