Jamaican Teas and Salada Foods postpone stock splits

Jamaican Teas and Salada Foods postpone stock splits

Jamaican Teas AGM postponed because of COVID-19

Observer business writer

Wednesday, March 25, 2020

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Food manufacturers, Jamaican Teas and Salada Foods have both pushed back their stock splits until further notice.

In the case of Jamaican Teas, its three-to-one stock split has been pushed back for a date to be determined by its board of directors.

The effective date of the stock split was supposed to have been from the close of business on April 1, 2020, but the company has advised that the proposed stock split record date has to be put back until further notice. In addition to pushing back its stock split, Jamaican Teas has also postponed its annual general meeting (AGM) which was scheduled for Friday, March 20, 2020.

This is being done in light of the COVID-19 pandemic and in accordance with the pronouncements of the Government of Jamaica on March 16, ordering a restriction on large gatherings. The AGM will be rescheduled for a date and time best-suited and safe, health-wise, for large gatherings.

The three-to-one stock split, when it happens, will result in the total issued shares in the company being increased from 695,083,459 ordinary shares of no par value to 2,085,250,377 ordinary shares of no par value.

The stock split is being executed to make the shares in Jamaican Teas more liquid, allowing them to trade more freely. When executed, this will be the third stock split by the company.

In April 2017, Jamaican Teas shareholders approved a two-to-one split of the stock. This followed another split in 2016 after which the price climbed close to $8 per share.

The board of Jamaican Teas, led by businessman and financial analyst John Jackson, has become concerned that the company's stock seems to have hit a wall of inactivity and market indifference.

Jackson expressed the view that there seems to be market resistance whenever the stock hits the $6 to $7 margin. Since April 2018, Jamaican Teas' share price has meandered between $4 and $6, going close to the $7 barrier only twice last year, on August 5 and September 9.

At the close of trading yesterday, Jamaican Teas lost $0.36 to end the day at $4.05. At year end September 2019 Jamaican Teas doubled profit, despite spinning off its investment arm, and listed a new company in QWI Investments. Jamaican Teas owns 34 per cent shareholding in that company.

In October 2019 the company also purchased 50 per cent of Bay City Foods, located in Montego Bay, making it a wholly owned subsidiary of the group. At year end September, net profit attributable to Jamaican Teas for the year increased by $201.2 million, from $198.5 million, to $399.7 million.

This resulted in earnings per share from continuing operations of 57.8 cents (2017-2018 – 29.0 cents). Company directors, in remarks attached to the fourth-quarter report, said investment properties produced $72.3 million in gains in 2019 compared with $24.8 million in 2017-2018.

However, the main tea business suffered a temporary setback in sales in the USA market due to a main distributor there rightsizing its inventories.

In the case of Salada Foods, the board yesterday gave notification of postponement for a stock split consideration. The board reported that the decision was taken via an electronic board meeting, held on Thursday, March 19 at its Bell Road, Kingston 11, complex.

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