Cooper to reduce stake in Pulse to around 50%
Kingsley Cooper intends to reduce his shareholdings in Pulse Investments to somewhere in the region of 50 per cent in the near to medium term.
Beyond that closure, the company's chairman told Wednesday Business that he was not able to comment further on the planned reduction of his holdings, now at 75 per cent of the company.
He added that while Pulse was open to raising equity to fund the next phase of its Villa Ronai expansion, no decision has been taken as yet. However, shareholders voted on Tuesday on increase the company's authorised share capital by one-third, or 113-million shares.
Issuing all of those shares to the public - being just one option for the company - would dilute Cooper's stake to 54 per cent, while raising $282 million at the current trading price. Pulse closed at $2.50 per share on Monday.
Cooper said that the company is currently undervalued, given that the market capitalisation of $680 million compares with $242 million last-twelve-month profit - reflecting a price-to-earnings ratio of 2.8 - and pales in comparison to Pulse's $1.7 billion in equity, which is bolstered by investment property valued at $1.2 billion as at December 2015.
"The market is better at understanding the company's non-traditional business and, as a consequence, is now rewarding its steady, positive performance," he said.
"After the Jamaica Stock Exchange itself, Pulse was the best performing stock in 2015."
Pulse, which traditionally operated as a model agency and entertainment company, has been focused on real estate development in recent years, pumping more than $300 million in its properties since 2008.
This includes the Villa Ronai property in Stony Hill, which now features restaurants, a spa and boutique stores, among other things. Pulse's property on Trafalgar Road in New Kingston also houses shops and an entertainment venue called Puls8.
The focus on real estate investment has also meant that the company has been tight on cash and working capital. Its current assets have largely been defined by advertising entitlements, without which its working
capital would have been in deficit from 2009 to 2013.
The modelling agency and entertainment company managed to achieve working capital surplus (outside of its ad entitlements) in 2014, and it has been growing since - it stood at $43 million as at December 2015, not accounting for the $381 million it had in advertising entitlements.
Cooper noted that Pulse will continue its phased real estate expansion at the nine-acre Villa Ronai Lifestyle Village, at a pace that available capital allows, but the company is generally disinclined to incur bank debt.
"Since 2006, (Pulse) has opted for either equity, the use of internally generated funds, or related party funding support, on favourable terms," he told Wednesday Business via email.
Since 2013, the company accrued debt owed to another of its chairman's companies - Samurai Investment - totalling $67.3 million as at December 31, 2015, but it is interest free and is treated as a non-current liability.
Bank loans have also been kept relatively low. It totalled $19 million at the end of December, when the company's cash position stood at
Pulse will pay its first dividend payment in more than two decades on Friday. The interim dividend of 6 cents per share will give a total payout will amount to $16.3 million.
The company's plan to address the matter of dividend payments going forward, while continuing to reduce debt and further develop its real estate, will, in Cooper's opinion, make the stock more attractive to investors.
"Pulse will continue to manage its cash tightly to ensure that all of the above can be accomplished," he said.