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Eppley heading back to market with preference share offer

Published:Wednesday | November 13, 2013 | 12:00 AM

Marcella Scarlett, Business Reporter

Eppley shareholders on Tuesday gave their approval to a plan to raise additional funding for the company via a preference share issue.

Eppley Limited, which made its market debut via an initial public offering expensively priced at J$377 per share in August, now aims to float 50 million or more redeemable preference units at about J$6 per share.

In readiness for the new offer, the extraordinary general meeting voted to increase the company's authorised capital through the creation of 100 million preference shares, at least half of which will be issued to investors.

Chairman of Eppley Limited, Nigel Clarke, said the company has already retained JMMB to structure the preference issue, the proceeds of which will fund Eppley's working capital.

"We are just raising capital; that is a part of our expansion," Clarke said.

"We have the opportunity to acquire capital and we have decided to go to the market to raise capital using preference shares."

Clarke said Eppley's line of business is to provide specific credit solutions and that "there are several projects in the pipeline that the company wants to pursue". He gave no timelines for the projects.

Eppley manages a portfolio of loans, leases and other commercial credit products marketed at corporate and professional customers.

$300 million target

Carl Townsend, JMMB's chief country officer of the capital market, said the company wants to raise about J$300 million, but may go higher.

"The company has authorisation to issue up to 100 million new shares, but we are not looking to do that entire J$600 million raise now. I think we will stop anywhere about J$350 million, or maybe up to J$400 million," Townsend said.

The issue will be a five-year cumulative redeemable preference share, offering to pay interest of 9.5 per cent per annum.

The shares will be floated over one week, from November 19 to 26, and listed on the junior stock exchange, if the offer is successful - making it the first preference listing for the junior market.

Some 796,249 units of Eppley's ordinary stock are already listed on the junior exchange. The company went public three months ago via an offer that raised J$82.56 million at J$377 per share. The price compares to Eppley's net asset value of J$383 per share disclosed in its first eanings report out in October.

Then, its broker was Proven Wealth Management Limited.

Nicholas Scott, managing director of Eppley, declined comment on why the company changed brokers.

With very few transactions since its listing, the Eppley stock has traded up and is currently performing at J$380 per share.

Andrea Akinach, a partner at the law firm Patterson, Muir, Hamilton, and a member of the legal team retained by Eppley, said the company has in excess of 25 shareholders, and that more than 27 per cent of issued shares are now in the hands of new shareholders.

Eppley is part of the Musson Jamaica group. Its other top shareholders include Stony Hill Capital Limited, General Accident Insurance and ATL Pension.

Eppley reported net interest income of J$34 million for the nine-month period ending September, and profit of J$23 million.