Barita aims to issue up to 200-million units in upcoming APO

Business

Barita aims to issue up to 200-million units in upcoming APO

BY DAVID ROSE
Observer business writer

Wednesday, July 01, 2020

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Local investment firm Barita Investments Limited (Barita) will seek approval from shareholders at the company's annual general meeting (AGM) at the AC Hotel by Marriott next Monday to consider the resolution surrounding its highly touted additional public offering (APO).

After successfully raising $9.2 billion through two oversubscribed rights issues in 2019, Barita is seeking to raise fresh capital for new opportunities on the horizon.

In a release sent to shareholders on June 12, the company outlined the special resolution, which gave directors the authority to issue up to 200 million ordinary shares for a capital raise with the option to upsize the issue by another 100 million ordinary shares in the event of an oversubscription.

A rights issue is a way companies can raise capital by issuing new shares to shareholders. A renounceable rights issue allows a shareholder to renounce part or all of their new shares to someone else who might not be a shareholder. However, a non-renounceable rights issue only allows shareholders to renounce their rights to other shareholders at a specified record date.

An APO is a means by which companies can issue new shares with the offer not being restricted to shareholders but being extended to members of the public who weren't shareholders before the APO.

Although the company hasn't given a price for its APO, it has usually offered new shares at a high discount to the market price at the announcement. The non-renounceable rights issue in February 2019 was offered at a 70 per cent discount of $15.50 compared to the market price of $50.99 while the renounceable rights issue in September 2019 was offered at a 51 per cent discount to the market price of $91.44.

As of June 29, 2020, the closing price of Barita was $54.27 which means a 40-60 per cent discount would indicate a possible issuance price range between $21.71 - $32.56. This would mean Barita could raise $4.34 billion to $6.51 Billion with an oversubscription of the 100 million units meaning another $2.17 billion to $3.26 billion.

The final price(s) will be determined by the board of directors depending on whether shareholders approve the resolution.

Barita's APO comes just after Proven Investments Limited closed its APO without any uptake. At the same time, Pulse Investments Limited, Panjam Investments Limited, and Sygnus Credit Investments Limited signalled earlier in the year their intention to consider APO's for their pipeline opportunities. JMMB Group Limited was the first company to successfully raise capital through an APO where they raised $12.3 billion between Jamaica and Trinidad and Tobago.

The AGM, should have been held on March 26, but was postponed due to the Government's social distancing requirements, which limited the number of participants who would have been able to attend.

This limitation, combined with the current stipulations of the Company's Act, meant that the company was unable to hold its AGM via virtual or synchronous means.

However, the Jamaica Stock Exchange (JSE) was successful in its application to the Supreme Court last week seeking permission for companies, which joined its action, to be able to hold their AGM's via electronic means due to the novel coronavirus pandemic. Barita is one of these companies who now has permission to hold its AGM via livestream with its shareholders voting electronically before or during the AGM.

David Rose is a chemistry student at The University of the West Indies, Mona. You can find him on Twitter (@jcknight2) and his contributions on www.everymickle.com. He is an analyst who also appears on Taking Stock.


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