Kintyre seeks additional US$500,000 to fund growth

Kintyre Holdings, the Junior Market company, aims to raise US$500,000 in private equity funding to finance operations.

Earning nearly three-quarters of a billion dollars in profit over six months has not solved its cash crunch. Much of the half-year earnings amounted to “paper profit” from property revaluations and acquisition gains, Chairman and CEO Tyrone Wilson acknowledged in a Financial Gleaner interview.

“We have all the infrastructure already,” Wilson said. “But we need working capital now.”

Kintyre reported net profit of $745.3 million for the six months ended June, up from $25.8 million a year earlier.

It ended the period, however, with negative cash and cash equivalents of $2.9 million. The weak liquidity is constraining the company as it races to commercialise its Pure Vibes water and Bold chemicals businesses before Christmas.

“We just have good sales for manufacturing and, of course, Visual Vibe continues to grow. But a lot of profit, paper profit from real estate and some kind of manufacturing side, too,” Wilson said. Visual Vibe is Kintyre’s fast-growing digital screen advertising subsidiary.

Total income of roughly $820 million comprised $56 million from operations and $764 million from fair-value gains on investment properties and acquisition-related gains.

Assets rose to $1.79 billion, and total equity more than doubled to $1.44 billion. Management has shifted its focus from acquisitions to securing the working capital needed to turn acquired assets into revenue-generating businesses.

The company wants about US$500,000 from private investors instead of taking on more debt.

“The conditions of the market right now is not the best,” Wilson said. He added that Kintyre still needed to rebuild shareholder confidence before accessing public equity markets. “But privately, we can raise money.”

He said investors remained willing to take shares despite the suspension of trading in the company’s stock on the Jamaica Stock Exchange. “There are people who are very interested in having shares in the business through these deals. They see where it’s going, they believe in the vision,” he said.

The planned raise is separate from a US$500,000 financing that Kintyre, or an associate company, recently secured from Portland. That facility comes due next year and may be converted into shares. “So we either pay it off or we convert it to equity as per the agreement,” Wilson said.

The fundraising reflects Kintyre’s shift from an acquisition-driven investment company to an operating manufacturer, with expansion under way in purified water, household chemicals, automotive products and rum. Through its Bold brand, the company currently markets windshield washer fluid, coolant, bleach, disinfectants, hand soap, and other household and commercial cleaning products.

Wilson said Kintyre has acquired a five-gallon water machine, chemical production equipment and a fully automated bottled-water system valued at roughly US$250,000. The line will blow bottles, wash, label, cap, package and palletise products.

The company aims to have the water operation running by October. Most manufacturing infrastructure should have been completed by the end of September, with chemical production following by the end of October.

“Everything will be in place,” Wilson said. He added that products should be widely available during the Christmas shopping season.

The company must also clear regulatory hurdles. Wilson said audited financial statements are slated for submission as part of the process to regain its listing and restore trading in the suspended stock.

In its shareholder report, the company stated: “Our balance sheet is strong; our cash position is not.” The coming months will test whether Kintyre can turn its expanding asset base into a sustainable operating business.

neville.graham@gleanerjm.com