Carib Cement locks in $170M in FX gains

Carib Cement could earn $5.30 in 2019.

Caribbean Cement secured a Jamaican dollar denominated loan from National Commercial Bank amounting to J$3.076 billion and available in United States Dollars. The report from the company advised that Board of Directors approved the facility on November 30 the same day the facility was received.
The company advised that the proceeds from the revolving Loan Facility were received on November 30 and will be used to pay related party debt denominated in United States Dollars, diversifying the sources of funds for the company. Throughout its term, the Loan Facility will also be used for general corporate purposes, reports Caribbean Cement.
The facility is an unsecured revolving loan facility for five years at a fixed interest rate of 7.45 percent per annum.
Cement owed the parent company $11.09 billion plus $1 billion due short term as of September, the September interim results show. The amounts were contracted in US dollars and resulted in devaluation losses of $464 million. Since September, the exchange rate swung in favour of the Jamaican dollar by over J$7. Carib Cement will enjoy a big foreign exchange gain and a reduction in the amount due on the loan to around US$65 million as a result of the revaluation of the local dollar, once NCB facility fund is used to pay down the loan from the ultimate parent company. As of today, the exchange rate is JS$127.4623 to the US dollar and on September 30, the average rate was $134.6486, a gain of more than J$7. The amount received for the loan amounts to just over US$24 million and has cut J$174 million from the devaluation losses incurred in the September quarter. The revaluation of the Jamaican dollar to date have reversed another $470 million in losses incurred on the amount of the loan that will not be paid off, with the combined savings being $640 million.
The facility, will allow the company to pay down the overseas loan from cash flow from its operations in the order of J$4-5 billion per annum. By the end of 2019, the foreign loan exposure should be reduced sharply.

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