Derrimon to raise capital next month via APO

Derrimon to raise capital next month via APO

BY DURRANT PATE
Observer Business Writer

Wednesday, August 26, 2020

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Derrimon Trading Company Limited is the latest company going to the equities market to raise capital for expansion and to write down its debt. This move by Derrimon is expected to happen next month.

However, before that the company's board will vote to recommend to shareholders to approve certain resolutions to facilitate raising additional equity investment by way of an additional public offering (APO) of ordinary shares.

The board meeting will take place on August 31, 2020 beginning at 2:00 pm.

It is not known how much money by way of equity Derrimon is seeking to raise through the APO, but it is expected to be much more than the $150 million raised from the initial public offering (IPO) back in December of 2013. The company is not divulging at this time the amount of shares that will be offered in the APO.

Speaking with The Business Observer yesterday, Derrimon chairman and chief executive officer, Derrick Cotterell, was hesitant in giving out any information about the upcoming APO, citing confidentiality rules of the Jamaica Stock Exchange (JSE), where Derrimon shares are traded.

Cotterell did confirm that the prospectus should be out next month.

The Derrimon boss is confident that the APO will be successful as its IPO, which was closed three minutes after opening on Monday, December 2, 2013. Back then the company offered 73.33 million shares at a price of $2.05 per share.

At the close of trading yesterday, the stock closed at $2.77.

DERRIMON FINANCIALS

For the six-month period ended June 30, 2020, Derrimon reported revenue of $6.30 billion which is $16.11 million more than the $6.29 billion reported for the corresponding six months in 2019. The impact of the slow down in economic activities and demand by consumers and manufacturers as a result of the COVID-19 pandemic were the main reason for the negligible growth experienced at the group level.

The group reported gross profit of $1.20 billion, which represents an increase of $105.38 million (9.63 per cent) above the $1.09 billion reported for the comparative period last year. Consolidated operating expenses for the six-month period was $965.76 million representing an increase of $141.56 million (17.17 per cent) over the $824.20 million reported for the same period in 2019.

Several other companies have sought to use an APO to raise additional capital in recent times.

Barita Investments Limited's APO opens today where the company is looking to raise between $9 billion - $16 billion, which might surpass JMMB Group Limited's record haul of $12.6 Billion set last November.

Panjam Investments Limited revealed in their AGM notice that the company is seeking to raise US $100 billion ($15.1 billion) in their own APO once they get approval from shareholders.

Sterling Investments Limited, Sygnus Credit Investments Limited and Pulse Investments Limited have confirmed their own capital raises with the APO option while Kingston Properties and First Rock Capital Holdings Limited haven't confirmed whether or not they will stick to another rights issue or go for an APO.


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