Capital & Credit Financial Group Limited (CCFG) has advised that participation in the Jamaica Debt Exchange (JDX) Transactions through its subsidiaries Capital & Credit Merchant Limited (CCMB) and Capital & Credit Securities Limited (CCSL) is deemed a material event in the context of its business affairs.
The JDX transactions affected approximately 56% of CCSL and 5% of CCMB total interest sensitive assets portfolio respectively as at January 14, 2010.
The overall effect on the company`s business and affairs as a result of the participation in the JDX is positive which is outlined below:
– the aspects of the financial statements affected by the JDX are Investments, Total Equity, Net Interest Income and Gain/ Loss on Securities;
– the expected financial impact for CCFG is an increase in Total Investment Assets of J$293 million (CCMB J$75m and CCSL J$218m) and an increase in
Equity of J$296 million (CCMB J$70m and CCSL J$226m), comprising fair value plus net gain on securities. Potential reduction in Net Interest Income are expected to be recovered through reduction in interest expenses going forward. The values computed in determination of the financial impact assume that the fair value of the new notes is equal to their par/ nominal values.
The company is not expected to be adversely affected as a result of the transaction. However, management has already taken action to reduce interest costs to ensure that net income remain in line with the company`s budgetary targets. Management also continues to pursue its plans to diversify its income streams.