The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods is set to imminently announce the successful completion of its “oversubscribed” $7.5 million preference share issue, with the proceeds set to finance the company’s ongoing expansion plans.

Multiple capital markets sources confirmed to Tribune Business that the BISX-listed food retail and franchise group was close to raising its targeted financing, which is in the form of a private placement.

“It was quite oversubscribed,” one source close to developments told Tribune Business. This newspaper was also told that an announcement on the successful $7.5 million capital raising could come as early as this week, once it concluded and the relevant regulators - BISX and the Securities Commission - had been informed.

Gavin Watchorn, AML Foods’ president and chief executive, declined to comment “at this point in time” when contacted on the issue by Tribune Business prior to the holiday weekend.

Kenwood Kerr, chief executive of Providence Advisors, the BISX-listed group’s financial advisers, referred Tribune Business back to Mr Watchorn when he was contacted by this newspaper.

The offering’s nature means that AML Foods is seeking to obtain the necessary funds from specific institutional and high net worth investors it has targeted. As the preference share is not public, members of the Bahamian public should not apply.

Preference shares, though treated as capital on the balance sheet, are a form of debt where the holders are paid interest at regular intervals before getting their principal back when the issue matures.

The latest issue will, by Tribune Business’s calculations, take AML Foods’ total preference share debt to around $17.5 million. It currently has $10 million on the books, having restructured the previous issue via a seven-year maturity date extension and 75 basis point reduction in interest payments, plus raising an extra $4.28 million.

Prior to the $7.5 million preference share issue, Mr Watchorn told Tribune Business in a recent interview that AML Foods had $12 million in debt, although this still compares favourably to the $38-$39 million that was on the balance sheet a decade ago.

Tribune Business understands that AML Foods shareholders were informed at this year’s annual general meeting (AGM) that the company was looking to raise $7.5 million via a private preference share placement. They were also told how it planned to use the capital raised.

The funds will likely be used to finance completion of the second Solomon’s Fresh Market store at the Harbour Bay Shopping Centre, plus the launch of the Carl’s Jr hamburger chain, AML Foods’ second food franchise.

The Harbour Bay store is currently undergoing a $5.5-$6 million renovation to bring it into line with AML Foods’ needs. In a previous interview with Tribune Business, Mr Watchorn said the second Solomon’s Fresh Market - together with its western New Providence predecessor, the new Solomon’s Lucaya store and addition of Carl’s Jr - would drive AML Foods’ group sales to a total of $150 million for its 2013-2014 financial year.

The Solomon’s Fresh Market at Harbour Bay is expected to generate around 90 new jobs, and $20 million in annual sales, once it opens in early December 2012. And Mr Watchorn also told Tribune Business earlier this month that plans for the first $1-$1.5 million Carl’s Jr outlet were set to be submitted to the Ministry of Works imminently.

AML Foods believes that the US west coast-headquartered hamburger chain will likely generate $15-$20 million in annual sales within five-seven years. By that time, there will be five Carl’s Jr locations in the Bahamas, and some 200-250 Bahamians employed there.

Explaining AML Foods’ decision to go for rapid expansion, Mr Watchorn said previously: “We wouldn’t have planned to open three new stores in 12 months, but the opportunity arose and we looked at this as a once in a lifetime opportunity to grow our company, establish ourselves in the marketplace, and we took it.

“Profit and sales increases over last year are great, but we remain focused on the job in hand and strategy. We think next year will be a banner year for us, once we get these projects set down, bedded in and together.

“There’s a lot of transition going on, but we’re quietly confident with the results we’re going to have for next year with both Fresh Markets, east and west, and a full year of Port Lucaya.”