Fri | Oct 19, 2018

Market timid on Pork, Sweet River IPO misses target

Published:Sunday | August 31, 2014 | 12:00 AM

VM Wealth Management Limited says the initial public offering of shares in Sweet River Abattoir & Supplies Company closed with a preliminary take-up of some 30.6 million shares, valued at approximately $118 million.

The subscription fell short of the $180 million target, but the Westmoreland-based meat-processing company secured the $50 million minimum it needed to qualify for listing on the junior market of the Jamaica Stock Exchange.

The Sweet River offer was on the market for two weeks, from August 12 to August 26.

Of the 46.633 million shares offered, 25.87 million was offered to the general public at J$3.86 per share. Other shares were reserved for employees, mentors and pig farmers, priced at $3.67 per share.

VM Wealth Management and Money Masters Limited managed the offer.

The final tally of shares, funds received and basis of allocation was to have been disclosed late Friday.

The invitation from Sweet River was made to Jamaican residents only with the issue aimed at raising equity to assist the company in expanding its processing facility.

The company, in its prospectus, says it will use the proceeds to pay down bank loans, complete construction for installation of a solar-energy generation system, working capital, and to pay expenses of the invitation which, the company estimates, would not exceed J$10 million.

Sweet River currently has a $190.6 million credit facility with First Global Bank, from which it has already drawn down $150 million for construction of a new processing facility.

Sweet River Abattoir & Supplies is in the business of slaughtering and performing first-level processing of pigs and small ruminants, and has planned, it said in it prospectus, to add sheep and goats in the near term.

The company was previously owned and operated as a part of a GraceKennedy & Company Limited subsidiary for some 40 years.

The majority of its current owners are said to be pig farmers.