Sun | Sep 23, 2018

KIW successor to offer shares on the junior market

Published:Wednesday | April 25, 2018 | 12:05 AM
John Mahfood, CEO of Jamaican Teas Limited.

Directors of KIW International Limited are considering a rights issue to finance the company's investment activities.

They are also looking at creating a successor company, which can be listed on the stock exchange, due to difficulties encountered in locating all the current KIW shareholders.

KIW was formed in 1908 to provide industrial repair services to sugar estates. Its main income was generated from the rental of factory and warehouse space at its location at 138 Spanish Town Road in Kingston. That property was sold off in October and the proceeds poured into equity investments.

Jackson disclosed plans for the rights issue while addressing last week's annual general meeting of Jamaican Teas. Jackson is chairman of KIW and acting chairman of Jamaican Teas, the latter of which holds 43 per cent of the ordinary shares in KIW.

CEO of Jamaican Teas John Mahfood later told the Financial Gleaner that a successor company might have to be created for the group to realise its goal of listing KIW.

"What we have found is that KIW had over 2,000 shareholders, but most of them have died many who held small shareholdings," said Mahfood.

"Some of them have been Finsac'ed, like Mutual Life and insurance companies that are closed, so we are not able to find most of the shareholders. What we are considering doing is forming a successor company to KIW which we hope will be listed. That's one of our plans for 2018," he said.

 

PLANS FOR KIW

 

KIW and Jamaican Teas hold investments of $400 million between them and the consideration for the successor to KIW is for it to operate as an investment company, according to Mahfood.

Jackson said KIW's equity portfolio had appreciated during the year, and was projected to continue growing.

Jamaican Teas acquired the controlling shareholding in KIW from the Jamaican Government for $57 million a year ago, with the goal of operating a warehouse.

However, the company received an offer to acquire the property housing KIW, which it sold for $160 million last November.

"The short-term plan is expected to see most of the funds invested in liquid assets, but we will look at other opportunities that may involve longer-term investments," said Jamaican Teas in its 2017 annual report, in reference to proceeds from the property deal.

Initially, the KIW directors had planned to re-enter the stock market via introduction of KIW's shares on the Jamaica Stock Exchange, but that plan was nixed by the authorities, Jackson disclosed last year.

Instead, the company was told it would have to offer its shares on the exchange via a public offer forcing KIW to reassess its strategy to go public. It now plans to do the offer this year via the junior market.

KIW is an associate company of Jamaican Teas. The tea company, which also operates a real estate arm, secured 43 per cent of the KIW ordinary shares as well as preference shares. The KIW preference shares were redeemed shortly after the acquisition.

avia.collinder@gleanerjm.com