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Joe Bogdanovich (Downsound Records CEO) and  long-time partner in dancehall calendar event Sting, recently inked a deal to buy the Sumfest brand and has now purchased a 51 per cent stake in FranJam, the franchising company of the Jamaican-themed restaurant, from KLE Group.

FranJam was spun off and sold to pay off a US$650,000 ($79 million) debt owed by KLE to Bogdanovich for a loan he gave to the company in 2014 after he took on a 23 per cent stake in KLE and joined its board.

The loan initially carried an interest rate of 6.5 per cent for a period of four years and was secured by the assets of Famous Nightclub. It was renegotiated in 2015 for new terms requiring 7.9 per cent interest per annum for three years, while the nightclub located in Portmore, St Catherine, was sold this January.

KLE CEO Gary Matalon, who also heads FranJam, said the debt renegotiation was done to offset any potentially negative impact the debt might have on the company’s balance sheet in 2015 while the deal to sell FranJam, which was already well advanced by then, was being finalised.

The sale and repayment of the debt valued KLE’s 49 per cent stake in FranJam at $76 million, which was reflected on the company’s balance sheet as investment in associate for the first quarter ending March 2016.

It also added $156 million to the company’s income statement, reflecting an accounting of the combined effects of repaying the $79-million debt and the unrealised gain on the revaluation of FranJam.

Importantly, the sale of Famous in January and the repayment of the costly debt make KLE Group, which is left with Tracks and Records in Marketplace, profitable.

The restaurant posted a modest operating profit of $4 million for its first quarter, a period Matalon says has historically been the worst three months for the establishment. During the comparative quarter in 2015, the restaurant posted a $5-million operating loss.

Depreciation runs KLE around $3.6 million a quarter, so substantially eliminating finance costs by repaying the debt to Bogdanovich also bodes well for the company’s profitability, especially given that better months for revenue are ahead, by Matalon’s estimation.

“Last Olympics, we did $22 million in revenue,” the KLE CEO told the Financial Gleaner. “Just accounting for price increases, the same amount of traffic this year could generate $29 million in revenue in August.”

With a gross profit margin of 64 per cent, as was the case in the first quarter of 2016, and with depreciation, administrative and other expenses running just below $10 million a month, achieving this revenue target would translate into $9 million to the bottom line for this year’s Olympics.

Tracks and Records’ first franchisee is also expected to open its doors in Ocho Rios, St Ann, within eight weeks, which might be just in time for the Games where six-time Olympic gold medallist Usain Bolt plans to repeat his triple-sprint win for a third time..Gleaner

The steady purchasing of Jamaican mainstays is frightening to say the least, but capitalists don’t seem too concern.