Bogdanovich acquires KLE Group shares

BY STEVEN JACKSON Business Observer staff reporter

Wednesday, July 23, 2014

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The KLE Group, which runs a number of night clubs, now lists local investor Josef Bogdanovich as a top-ten shareholder at the listed company, according to public data from its registrar, Sagicor Bank.

The sale represents the largest block transaction since listing on the Junior Market in 2012.

"It was an arranged purchase," stated KLE Chief Executive Officer Gary Matalon in a phone interview with the Business Observer on Monday. He indicated that the "local investor" aims to capitalise on the company's growth prospects based on Usain Bolt's Tracks & Records' franchise opportunities in New York, USA and Montego Bay, Jamaica.

"Given the developments we have been working on over the 24 months, we are closer to realising goals of an international expansion," he said.

Bogdanovich now holds some 7.1 million shares up to July 21 which equate to the sixth largest shareholding. Prior to July, he was not listed as a top-ten shareholder.

Bogdanovich, who operates Downsound Records -- a popular studio that produces Ninjaman, Specialist and other deejays -- could not be reached for comment.

Over the same period, non-executive director Craig Powell sold 7.18 million shares which reduced his shareholding from 10.4 to 3.2 million, data indicate.

Powell, an experienced event marketer, held an interest in the vegetable supply company Jamaica Hydroponics, which was reportedly put up for divestment by the Development Bank of Jamaica last year.

Matalon still holds 13.6 million KLE shares, the largest of the 100 million outstanding. Also, the shares controlled by sprinter Usain Bolt via Sherwood Holdings remain unchanged at 6.7 million units.

"We have persons waiting and wanting to get in and are aggressively seeking out more shares but they cannot get enough shares," Matalon said. "So there will certainly be more trades like that in the future."

The sale occurred on July 11 with 7.18 million units trading at 90 cents, according to Jamaica Stock Exchange trading data.

Matalon declined to confirm or deny the names of the parties involved in order to respect protocol. He, however, indicated that the director sold the shares for "personal reasons".

KLE's stock price lost more than half its value over a year from $2.70 to $0.90 up to Monday. The stock suffered from quarterly losses but also from an otherwise depressed stock market.

"We had a rough year and did restructuring which put us back on level ground," Matalon said.

KLE operates Fiction, Famous Night Club and Usain Bolt's Tracks & Records. It recorded a $12.6-million loss for the March quarter compared with a $17.2-million loss a year earlier. In addition to restructuring, the business has focused on its franchising model for Tracks & Records.

"A contract was signed in January this year with the iFranchise Group to carry us through the process right to the point of selling franchsises," the company said in its financials. "In addition, we engaged one of the top franchise lawyers in the US to draft the agreements necessary to allow us to sell franchises globally."

It now operates Fiction night club in a joint venture partnership through which KLE owns a 40 per cent stake, Matalon indicated. Matalon also said that its hotel project, entitled Bessa, a partnership with Sagicor Life Jamaica Limited, awaits government planning approval.

KLE Group, in its initial public offering, raised $94 million.




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