Pulse’s over $720-million Q4 loss wipes out nine-month profit, will sell villas to pay down on bond

Pulse Investments reported a net loss of $720 million in its fourth quarter, which wiped out profit generated over nine months due to writing down its advertising entitlements, which resulted in a full-year loss for the modelling and hospitality company.

“Your board took the difficult but responsible decision to recognise, in full and in a single year, a substantial provision against the advertising entitlements that the company has carried for many years,” stated Chairman Hilary Phillips.

Over the full year, Pulse recorded a $349-million loss for the year to June, against a profit of $357.6 million a year earlier.

The directors recognised an impairment provision of $633.8 million against advertising entitlements, of which $500 million was an additional charge reflecting that none of the entitlements have been used or sold in three years. Chairman Phillips described the writedown as a deliberate reset to “chose clarity over comfort”.

Annual turnover fell to $148.1 million from $157.5 million, with rental income from Trafalgar Road and Villa Ronai contributing $140.2 million, or 95 per cent of the total. Administrative expenses were flat at $93.6 million. Stockholders’ equity stood at $9.30 billion, or $1.43 per stock unit.

BOND NEGOTIATIONS

Pulse received a payment holiday on interest and principal, from January to the end of June, from its bondholder. It resulted in an accumulation of $148.9 million of unpaid interest, which lifted the principal to $975.6 million. The holiday was not extended while the bondholder considers a restructuring proposal, leaving the instrument in technical default. It has been reclassified as a current liability, which left current liabilities exceeding current assets by $1.02 billion at the year end.

“As the bond is in technical default and matures on June 29, 2027, it is shown as a current liability, so current liabilities exceeded current assets,” stated the company.

Auditors Baker Tilly flagged a material uncertainty over going concern, noting the company’s ability to continue depends on the restructuring succeeding. Their opinion was not modified.

Pulse put a proposal to JCSD Trustee Services before the June deadline and submitted an updated version on September 11. It would settle the bond from the proceeds of selling suites in a redeveloped Villa Ronai rather than from operating cash flow. The bondholder has asked for further information. The bond is secured by a first legal mortgage over Villa Ronai, carried at $5.4 billion, or 5.5 times the principal.

The advertising entitlements are non-cash consideration for television programmes supplied to media houses across the Caribbean and New York. At June, the company was owed 56,933 thirty-second spots, with a gross value of US$15.4 million to US$18.2 million at minimum prime-time rates. The provision now stands at $1.08 billion, 41 per cent of the gross balance, leaving a carrying amount of $1.59 billion. Pulse is negotiating a sale of spots through an advertising agency and expects it to generate funding during 2027. If no sale is concluded, the remaining balance will be written down over two years.

The Villa Ronai plan would reconfigure 62 existing units into 55 one-bedroom suites and add a three-storey building with 20 more, for 75 in total, alongside a restaurant, pool and wellness facilities.

Pulse’s outlook includes concluding the bond restructuring, launching the Villa Ronai redevelopment, and realising value from the advertising entitlements.

“Each of these steps moves Pulse closer to a business that earns steady, cash-backed returns from premium hospitality and lifestyle real estate,” stated the chairman.