Caribbean Industrial buys tools firm in preparation for listing
Flooring contractor Caribbean Industrial Systems (CIS) will seek to raise $65 million in a bond offering as part of a series of financing measures that will eventually see the company listing on the stock exchange.
CIS plans to list within two years, and is laying the groundwork for expansion as part of that goal, but is yet to determine whether it will be doing an initial public offering of shares. It will use the bond proceeds and other cash resources to fully acquire a tools store, Airmark Equipment and Supplies.
“Airmark will complement our CIS operations,” said CIS chief executive Andre Hutchinson in a Financial Gleaner interview on Monday. Both companies are based in Kingston.
Hutchinson, a former trader with financial firms JMMB and Proven, said the bond is expected to close within the coming days. Stocks & Securities Limited is acting as the lead broker.
“SSL was able to facilitate the uniqueness of the transaction,” said Hutchinson.
The bond will replace the bridge loan used to acquire Airmark last month, he added.
CIS, which operates in Jamaica and Guyana, provides services which seals floors, walls and roofs with resin to prevent bacteria build-up in restaurants and factories. This is an important step for certification in HACCP and International Organisation for Standardisation.
CIS acquired Airmark to create a retail outlet for the company. It will sell tools and equipment offered by Airmark but also cross-sell CIS sealing products and services to thousands of clients.
“The great thing about Airmark is that we acquired 11,000 new clients and now we can market coating options, paints, rollers and accessories to support the construction industry. To support do-it-yourself operations and we expect revenue to double in the next year,” Hutchinson said.
“This gives us access to equipment, licences and distribution deals. We can offer equipment for sale, rental and repair,” he said.
Airmark was founded in 1996 by Calvin and Christine Williams, according to Companies Office of Jamaica records. The founders fully sold the business to CIS and with it increased the workforce from four to nine workers with an additional 12 part-time contractors. Efforts to speak to the Airmark founders were unsuccessful. They were said to no longer operate from the office, which is located at Shortwood Road.
CIS started operations in 2012 with shareholders Andre Hutchinson, Gordon Hutchinson, Fay Hutchinson, Leslie Campbell, Gary Harris and Evans Maitland. It expanded into Guyana over six years ago, to focus on projects in that market.
Now it is also looking to grow the overseas operation by doing a similar acquisition of a tools company in Guyana. CIS, however, wants to acquire a company that already has a retail presence in order to further grow revenues.
“We expect overall revenues to double by next year,” he said without disclosing numbers. “And we still are hunting for more deals.”
As for the prospective listing of CIS on the stock market, Hutchinson says the target date is by the first quarter of 2021, but the company is still weighing how it will enter the market.
“We are not sure at this time whether we will list ordinary or preference shares,” he said.