JPS crewmen working on power lines. New co-owner of JPS, Taqa, has offered to buy back bonds issued by JPS.

MaruEnergy Caribbean, the firm that appears to be the holding company for United Arab Emirates-based Abu Dhabi National Energy Company (TAQA), has made a mandatory offer to buy back US$279.8 million in bonds issued years ago by the corporation's light and power operations in Jamaica and Trinidad.

Last month TAQA paid US$320 million for a 50 per cent stake in Marubeni Caribbean Holdings, parent to monopoly power distributor, Jamaica Public Service Company (JPS).

The bonds were issued around 2005, while JPS and MaruEnergy Trinidad (MET) were under the control of Mirant Corporation.

The terms of the indenture or bond agreement require the new major part owners to make the offer.

Interest payments were made twice yearly in January and July.

Industry sources said late yesterday that in light of the current economic situation, bond holders are likely to take up the offer.

'Change of control'

MaruEnergy Caribbean is giving bond holders until May to accept its 'change of control' offer for any and all of the approximately US$180 million aggregate principal amount outstanding on the 11 per cent senior notes issued by JPS; and MaruEnergy JPSCO Finance Ltd, formerly known as Mirant JPSCO.

It also made "a cash tender offer for any and all of the approximatelyUS$99.8 million aggregate principal amount outstanding of 7.017 per cent notes issued by MaruEnergy Trinidad (MET), formerly Mirant Trinidad Investments.

The two bonds were due for redemption in 2016.

The offer for the JPS bonds is at a purchase price of 101 per cent of the principal amount of the notes, as dictated by the bond agreement.

Senior notes entitle holders to receive their money ahead of other creditors in the event of the liquidation of a company.

While some Jamaican investors are believed to be holding some of the notes, the majority are said to be in the United States. Local investment houses including NCB Capital Markets and Pan Caribbean Financial Services participated in their distribution.

Investors holding the Trinidadian entity's paper are being offered $1,012.50 per $1,000 face value or 101.25 per cent.

April 16 consent date

MaruEnergy says this includes a consent payment of $1.25 per $1,000 of principal, as note holders are also being asked to agree to certain changes in the bond's indenture - the agreement between the company and the bond holders.

Bond holders who tender their notes after the consent date of April 16 will receive $1,011.25 per $1,000 of the principal amount of the notes, that is, minus the consent payment.

Holders will be "required to consent to certain proposed amendments to the indenture governing the notes, which will eliminate certain restrictive covenants and events of default and modify the provisions of the indenture," the notice explained.

"Holders may not tender their notes without delivering consents or deliver consents without tendering their notes," it added.

Financial Gleaner was unable to get a comment from MaruEnergy Caribbean.

Questions to the New York-based investment house, D.F. King and Company, the stated information agents for the MaruEnergy Caribbean notices were not acknowledged, while JPSCo's head of corporate communications, Winsome Callum said, up to press time, she was still seeking answers from Marubeni's principals in Japan.

Credit facilities

"The purchaser intends to finance the change of control offer with proceeds from new fully documented credit facilities aggregating $193.0 million," the notice for the JPSCo instruments said.

Meanwhile, the source of the funds for tender offer for the Marubeni Trinidad bonds was stated as "new fully documented credit facilities aggregating $102.0 million."

"The availability of such financing is one of the conditions to the tender offer and consent solicitation," the notice added.

The change of control offers are being made by MaruEnergy JPS (Cayman Islands) Finance Limited and Marubeni Power (Cayman Islands) Finance Limited, described in the notices as limited purpose entities and subsidiaries of the Marubeni, formed for the purpose of the buy back.

Bond holders who turn in their notes have been promised the stated purchase price plus accrued and unpaid interest to, but not including, the purchase date.

Payments are expected to be made on May 7.

Marubeni has engaged Mizuho Securities USA Inc to act as dealer manager for the tender offer and solicitation agent for the consent solicitation with respect to its Trinidad securities.

huntley.medley@gleanerjm.com

Tomofumi Fukuda, president of Marubeni Caribbean Power Holdings, parent company to Jamaica Public Service Company. - Rudolph Brown/Chief Photographer