C2W Music rescue plan - Berry and Wilkie to resign from board, pending regulatory approval
Ivan Berry and Derek Wilke, two directors and primary shareholders of loss-making C2W Music Limited, will resign from the board but are not expected to walk away from the company, under the terms of a rescue plan that is still to be approved by regulators.
The rescue project was initially disclosed at the weekend during the music publishing company's annual general meeting, but only C2W is not saying what form it would take.
C2W has struggled to find its footing since its debut as a start-up operation on the junior market of the Jamaica Stock Exchange in 2012. The stock, which listed at $1.29 per share, is now trading at around 45 cents.
"We could have walked away," said Chairman Derek Wilkie in his opening remarks at the annual general meeting, saying he and Berry had not been paid in two years as executive directors of the business.
"None of the directors have ever been paid or received money from the company," Wilkie added.
The company remained largely silent on the details of the rescue plan - which requires regulatory approval from the Financial Services Commission and the Jamaica Stock Exchange - other than to confirm it would result in a change of the board.
However, Berry and Wilkie would stay on in some capacity, and continue to manage the music catalogue, which comprises 700 songs, most of which were made and acquired in C2W's first year in operation.
"We would remove ourselves as chairman and director. There would be a new board, but that catalogue will still be administered by us," said Wilke.
"We wouldn't be here if we didn't think that the rescue plan was a good thing and likely to be approved. Once it happens, Derek and I are committed, instead of walking away, we are committed to stay on to complete the job we started which is the exploitation of the catalogue," added Berry.
DETAILS TO BE VOTED ON
Once approved by the regulators, the details of the plan would be voted on at an extraordinary meeting of shareholders, he said.
C2W was launched as a start-up in late 2011 and listed on the junior market in early 2012. It has struggled to earn revenue, while racking up US$1.52 million in deficits.
Stocks & Securities Limited, which acted as the company's lead arranger and broker, was also cautious in its statement to shareholders.
"We operate within a regulated environment and we have to be extremely careful what [we] say and convey," said CEO Lamar Harris at the meeting. "I know it is a little bit frustrating because the directors are excited about what is to come, but we just cannot [say anything]. We are also shareholders, so any plan that is put forth is because we believe in it and see where it can benefit shareholders."
C2W generated annual revenue of US$11,477 in 2017, down from US$66,749 the previous year. The accumulation of losses has pushed its equity position into the red, at negative US$236,531.
Last July, C2W Music announced that it would consider selling the company after it posted another lacklustre quarter. The company remains one of the most consistent lossmakers on the junior market, despite adjustments to its business model.
Minority shareholder Lancel Bloomfield asked why it took more than five years to recognise that C2W Music "was going nowhere".
Wilkie: "I don't think that's a fair question".
Bloomfield: "I think it is".
Wilkie: "If you believe in something, then you will continue with it. But as I said, there comes a time when you try something and if it doesn't work, then you have to change course. This is the time".
Both Wilke and Berry were among directors re-elected at the weekend meeting.