From left, Davies and Davis

Clarendon Alumina Production (CAP), Alcoa's partner in the 1.3 million tonne-a-year Jamalco refinery, raised US$200 million (J$13.2 billion) from the world bond market Thursday to consolidate and lower the cost of its debt, while pumping US$80 million into the entity for working capital.

"I am going to clear some substantial obligations," Finance Minister Dr. Omar Davies told Sunday Business in an interview Friday.

"This includes retiring expensive debt and clearing some advances by some government agencies."

CAP is headed by Cabinet Secretary Dr. Carlton Davis, brother to Davies.

At the end of March this year, the bauxite/alumina company's liabilities, which included advances from Alcoa and some loans from Bauxite and Alumina Trading Company of Jamaica (BATCO), totalled US$148 million, US$30 million of which was accounts payable.

The interest expenses totalled US$16 million for the year to March 31, placing the cost of the US$118 million in loans and advances at around 13.5 per cent.

Coupon rate

The bond, which was launched and priced on the United States Securities and Exchange Commission, will carry a coupon rate of 8.5 per cent, according to a press release made by the Finance Ministry on Friday.

It has a 15-year tenor and yield to maturity of 8.55 per cent.

The float, which attracted bids of US$550 from the U.S. and Europe, was handled by Bear, Stearns & Company.

CAP only had US$250,000 in retained earnings on its books at March 31, 2006.

Moody's Investor Services and Fitch have rated the bond at Ba2 and B+, respectively, said Davies.

business@gleanerjm.com