Derrimon gets nod for new preference share issue
Derrimon Trading Limited will issue new preference shares to the market to refinance its existing debt.
"The offer will refinance our current preference shares," said Chairman and CEO Derrick Cotterell at the extraordinary general meeting (EGM) for shareholders to vote on the plan. "The new offer will be released later this month."
Cotterell declined to give details on the size of the offer, saying financial advisers from Mayberry Investments Limited have indicated that the prospectus remained under review by regulator Financial Services Commission.
Shareholders at the EGM approved a resolution for the creation of an additional 400 million shares, to 800.4 million units. Shareholders also voted to designate the newly created capital as redeemable preference shares and granted the Derrimon board the authority to issue those shares from time to time.
Derrimon's capital structure now includes 275.4 million ordinary shares and 525 million redeemable preference shares.
Due to mature
The three-year Derrimon 11.75% preference shares are due to mature March 12. The 125 million shares, which trade on the Jamaica Stock Exchange, are currently valued at just under $269 million.
Cotterell said the company chose to redeem them from a new share issue, rather than profits, both to "preserve cash and take advantage of the lower interest rate environment."
Additionally, from an accounting perspective, the executive chairman said issuing new preference shares would allow the group to avoid creating a non-distributable, statutory capital redemption reserve account, which would require Derrimon to sterilise cash up to the amount redeemed.
In its newly released audited accounts for year ending December 2017, Derrimon reported group revenue of $6.35 billion and net profit of $204.3 million, some of which resulted from gains from the takeover of Caribbean Flavours & Fragrances Limited.
Derrimon also restructured its debt in 2017, which saw savings going to the bottom line, while reducing borrowings from $844 million to $747 million, year on year.