Barbadian investors have lost the opportunity to get first pick at owning a piece of the historic Crane Residential Resorts.
Even as Jamaica remains in an International Monetary Fund programme, the owners of the St Philip company have chosen that island as the location to start raising $80 million via a private placement of eight million preference shares.
Crane owner Paul Doyle made the announcement in an interview with BARBADOS BUSINESS AUTHORITY, noting that the shares would be going on the market this month at $10 each, with plans to also offer them in Barbados and Trinidad and Tobago afterwards.
But the hotelier revealed that although Jamaica was having its own hard times, the Crane, trading name for Millennium Investments Limited, was facing tough questions from investors there who were worried about the current state of the Barbados economy.
At the same time, Doyle said his company fully intended to “take one step at a time.
“We are going to start in Jamaica, interest is there. Obviously people are concerned about the economy here, but given that the tourism market is really not [completely] affected by the local economy, I think we were able to successfully make the argument with enough of the Jamaican investors that they see that we are kind of insulated from Barbados’ issues,” he said.
“But it is a concern, obviously. Investors look at everything in a holistic way. Anything that is good or bad in the economy has an effect, but we are confident of it going forward enough to do what we want to do in the short term.
“I guess they understand tourism more there and we are going to basically take it one step at a time. In our business, because we are developing, you can only use funds so fast properly, so therefore starting in Jamaica seems to make sense from our point of view,” he added.
Doyle said the Crane management team was “optimistic for the offering and also to get going on projects in Barbados and do our bit for the economy”, but he said this would be done in a carefully planned and executed manner.
“I think the prudent thing to do is get this offering under our belt and get the Beach Houses at Culpepper [St Philip] started, and as a result of the offering we would like to see that start right away. We have some interesting next steps but I think it is prudent to take one step at a time, given the economy,” he explained.
News of these latest developments comes more than a year after the share offer was initially intended to be launched, on the heels of the latest credit rating report on the offering, issued by Caribbean Information & Credit Rating Services Limited (CariCRIS) last month.
In November 2012 CariCRIS gave the Crane a CariA local currency rating and a CariA- foreign currency rating. Last month these ratings were changed to CariA- and CariBBB+, respectively.
The rating agency said the foreign currency regional rating “indicates that the level of creditworthiness of this obligation, adjudged in relation to other obligations in the Caribbean is adequate”.
Factors in the Crane’s favour included its “strong brand equity, well qualified, highly experienced senior management team, low-cost business model, good profitability and low gearing”.
On the other hand, its weaknesses were a “declining tourism industry and highly competitive timeshare sub-industry” and the fact that Doyle’s “succession plan” was in its initial stages.
CariCRIS also said the rating would be affected by some “sensitive factors”: sharp change in the performance of the Barbados economy, sharp changes in the performance of The Crane’s major source markets, and significant changes in sales of shared ownership.
