University housing provider, 138 Student Living (SL) is going to the equities market to raise additional capital for its expansion plans through an Additional Public Offer (APO) of J$2.2 billion.
The APO of up to 513,972,784 new ordinary shares opens this Friday, September 8, 2023, and is slated to close on October 6, 2023. The APO comprises 318,515,000 new ordinary shares in the reserved pool for existing shareholders, 138SL team members and strategic partners at a cost of J$4.05 per share and 195,457,784 new ordinary shares at J$4.40 per share for the general public.
The APO is intended largely as a strategy to better optimize 128SL’s capital structure by replacing a portion of its over J$4.2 billion debt stock with equity, which will better align its capital structure with its income streams. By so doing, 138SL will also be able to capitalize on opportunities to grow its top-line revenue.
More details on the APO
The APO should also broaden its shareholder base whilst still recognizing existing shareholders, having supported the business over the years are being given the opportunity to invest in the company on a priority basis. Accordingly, 138SL has allocated a portion of the new ordinary shares available in this APO to existing shareholders, who may subscribe at a discounted price.
The APO is intended to further shore up the future of 138SL and ensure that it continues to be “the Caribbean’s premier provider of University Housing”. It is the intention of the company to apply to the Jamaica Stock Exchange (JSE) for admission of the new ordinary shares to trade on the JSE Main Market.
The lead broker for the APO is GK Capital Management Limited. The prospectus for the APO provides details on some of 138SL’s future plans, which include optimizing its capital structure.
The company currently operates a total of 1,464 rooms at four locations on the University of the West Indies, Mona Campus. Under the current Concession Agreements, the capacity exists to build another 842 student rooms and 138SL is now at a stage where it expects to generate significant amounts of free cash flow.
I38SL’s Chief Executive Officer, Cranston Ewan explains, “if this option is exercised, between 138SL and its sister company 138SLR, the company will operate 2,306 rooms, an approximately 60% increase from the existing housing stock. There is also the opportunity for the company to grow, both regionally and internationally, and to further grow its short-term rental business revenue stream, which it has only just begun to explore.”
138SL will undoubtedly benefit from the increased capital raised by this APO which will further support the execution of its strategic value-creating initiatives.