MARGARITAVILLE Turks & Caicos, part of the Caribbean franchise controlled by Jamaican Ian Dear, aims to raise US$2 million ($216 million) via listing on the Jamaica Stock Exchange (JSE) next month.

It would become the second listing on the US dollar denominated market, following Proven, which is also the broker for the upcoming initial public offering (IPO).

The proceeds would finance working capital needs and finance the roll-out of another bar and grill on the premises, Dear told the Jamaica Observer.

The offer opens next Monday at US$0.10 a share.

The company with total equity valued at some US$4.2 million holds US$4.8 million in assets and has relatively low debt at US$590,000. Its major liability relates to annual lease payment of some US$342,000.

Importantly, the listing will only offer shares in the Grand Turks-based cruise pier operation and not those in Jamaica or the Cayman Islands.

The Turks brand best showcases Margaritaville’s preferred business model of securing exclusive contracts to become the sole food and drink venue at an airport or seaport.

“We virtually have a captive market where we are in the port of Grand Turks,” said Ian Dear CEO in a Jamaica Observer interview at the venue last Friday. “This is the model that we are focused on as the future of our group: The captive audience both in cruise ports and airports and high volume locations. Certainly Grand Turks takes centre stage to that.”

That venue is part of eight franchise operations spread in three territories including Jamaica, Turks and Cayman.

The offer will result in the public acquiring some 30 per cent of the total shares and Margaritaville Caribbean at 68 per cent, if fully subscribed. The company hopes to raise a minimum of US$1.35 million or it will refund the offer to shareholders.

Profit at the company has oscillated over the last five years. The latest audited financials show net profit was down one-third to US$597,000 for its May 2013 year end compared with year earlier levels.

It was based on flat revenues at US$4.5 million and rising cost of sales.

However, its latest cash flow position increased to US$87,000 compared with US$60,000 a year earlier based on reduction in bank loan payments.

Dear projects that revenues will rise in the fiscal year ending May 2014 based on rising cruise arrivals set to grow from 700,000 to one million.

“For this financial year end we are on target to achieve just over US$6 million ending May 2014,” he told the Observer in Turks. “Of course with a million cruise passengers anticipated for calendar year 2014 the horizon is bright; we anticipate that those revenues would increase year-on-year.”

Grand Turk is a relatively new cruising destination demonstrating five per cent annual average growth over the last three years. The prospectus quoting figures from Carnival Corporation indicates that the pier recorded 750,000 passengers in calendar 2013.

“Currently, estimates for calendar 2014 based on pre-bookings notified by Carnival Corporation are for one million passengers,” stated the prospectus for Margaritaville’s IPO. “The directors are of the view that overall, Caribbean passenger numbers are increasing, particularly in respect of summer bookings because more cruise lines are electing to remain in the Caribbean during the summer months instead of sailing elsewhere.”

The Turks location opened its doors in 2006 joining 11 other Jimmy Buffett’s Margaritaville locations in the US, Caribbean and Mexico. The Turks location is managed by Anthony Hewie and employs a balance of Turks and Jamaican staff.

The company’s premises comprise approximately 16,000 square feet, inclusive of a thatched roof restaurant that can seat 500 customers.

It is part of the Margaritaville Caribbean Group of companies, and a wholly owned subsidiary of Margaritaville Caribbean.

The group operates the Margaritaville chain of restaurants in various Caribbean destinations, inclusive of the flagship restaurant launched on the “Hip Strip” in the centre of Montego Bay, Jamaica, in 1995.

The concept for the group’s restaurants was developed in part by chief executive officer and founding shareholder, Ian Dear. In 2001, the group joined forces with US entertainer Jimmy Buffett and became the Caribbean franchise holder for the Jimmy Buffet’s Margaritaville restaurant concept.

That venue is part of eight franchise operations spread in three territories including Jamaica, Turks and Cayman. Dear pays a franchise fee to musician Jimmy Buffet, the conceptualiser of Margaritaville, which operates a series of stores globally.