Derrimon allocation mostly fulfils bids in IPO

Sunday, December 08, 2013    

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DERRIMON Trading's employees ended up with just under two per cent of its shares through an initial public offering (IPO).

Key suppliers of the distributor, which also operates four Sampars Cash 'N' Carry stores across the country, also took a 4.5 per cent stake, while three directors of the company — Derrick Cotterell, Monique Cotterell and Ian Kelly — opted to convert debt owed to them into shares, representing 9.4 per cent of Derrimon.

Other reserves shares were fully allocated to those who took up the offer, but for the general public — who had access to just over three per cent of the company's shares — just the first 50,000 shares (valued at just over $100,000) will be fully satisfied; anything above, they will get 78 per cent of their bid.

Mayberry Investments, the lead broker for the IPO, had to divvy up the shares, because 206 applications were made for shares valued at approximately $155 million, but the company was just offering $150.3 million worth of shares.

Refunds for oversubscription will commence next Thursday.

Now that the IPO is closed, and the trader awaits listing on the Junior Market of the Jamaica Stock Exchange, Derrimon will move forward with plans to reduce debt from $200 million, upgrade software, beef up working capital, and expand its network of outlets from the four stores located on Washington Boulevard, Marcus Garvey Drive in St Andrew, in downtown Kingston, and in Mandeville

Derrimon's expansion has been aggressive to say the least.

It grew its revenue base from $807 million five years ago to $4.7 billion last year, while sales were up by 13 per cent during the first eight months of 2013.

Over that time, it acquired Sampars and established three further satellite outlets in its bid to increase vertical integration and retail market penetration.

Pre-tax profit also climbed from $8 million in 2008 to $36 million in 2011, before falling to $25 million last year due to increased finance costs, from $9 million in 2011 to nearly $20 million last year. It also saw gains on foreign exchange fall from $23 million in 2011 to $230,000 last year.

Derrimon operates primarily from its facility located on Marcus Garvey Drive. However, its distribution network extends islandwide. Its warehouse facility of approximately 100,000 square feet sits on 3.5 acres of land and is less than two miles from the port of Kingston. Its capital base stood at $140 million as at August 31, 2013.





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