Seeking to raise $120.54 million for expansion, air-conditioning and engineering company CAC 2000 Limited has issued an initial public offering (IPO) of shares to the public and reserved applicants.

Managed by brokerage and asset management firm Victoria Mutual Wealth Management Limited, the offer represents 22.5 per cent of the company and includes 14,516,129 shares from the general public and 14,516,129 for reserve applicants.

The offer opens on December 16 and closes seven days later on the 23rd.

All shares are priced at the subscription price of $4.89 each, except for 500,000 employee shares which are priced at $3.67 per shar,e and 4,256,988 dividend conversion shares which are priced at $0.001 per share.

CAC 2000 owes some $17.6 million in dividends to existing shareholders in exchange for which it is offering shares from the IPO at the steep discount.

CAC 2000 is seeking to list on the Junior market of the Jamaica Stock Exchange where the air-conditioning firm will be free from corporate income tax charges for the first five years.The application to the JSE is dependent upon the company’s ability to raise a minimum $50 million as a result of the invitation and other JSE criteria.

Chief Executive Officer Steven Marston said in the company’s prospectus that the company is positioning itself to take advantage of “a larger volume of large-scale projects”, including engineering services for hotels in Jamaica, and has also identified other opportunities within the Caribbean region that are to be realised within the short to medium term.

Half of a total 200 million approved shares in the company are currently held by shareholders Howard Chin (3.09 per cent), Colin Roberts (25.68 per cent), Louis Williams (6.18 per cent) and St. Lucian company Caribbean Air Conditioning Limited, which has 65.05 per cent and is considered the holding company for CAC 2000. These percentages will change after a successful offer, but CAC will retain 51 per cent of the company.

The air-conditioning company, which was incorporated on July 24, 2000, has its head office at 231 Marcus Garvey Drive in Kingston.

The company describes itself as a leading provider of commercial air-conditioning (HVAC) systems and refrigeration and energy solutions in Jamaica, also “maintaining a respectable share of the residential market”. The company designs, installs and services systems predominantly for commercial clients.

The prospectus states, “At its core, the company is an engineering and energy solutions company by virtue of the collective qualifications and experience of its management team (including its CEO) specialising in applied air conditioning systems (chillers, cooling towers, pumps, air handling units and state of the art Variable Refrigerant Flow systems) and prides itself on offering technical solutions and multiple options for its clients’ needs.”

Over a five-year period of review, pre-tax profits averaged $58.14 million rising from $29.57 million in 2011 to a high of $97.41 million in 2012; growth attributed to both increased revenues and declining cost of sales.

Financial performance during the year 2014/15 (year ended July 31, 2015) saw revenues totalling $823.69m – 16 per cent higher than 2013/14, or $115.4m more than the previous year. Profit before tax stood at $48.8m in 2014/2015 compared to $51.3m in 2013/2014.

The prospectus states that impact of a foreign exchange loss of $6.0m resulted in the net profit of $37.4m in 2014/2015 remaining relatively flat compared to $38.3M the previous year.

Cash flow reflected cash balances of $36.5m and $59.6m in 2013/2014 and 2014/2015 respectively.

Over 50 per cent of the company’s present business comes from system replacements, new commercial air conditioning projects, follow-up service contracts, and client system upgrades.

The prospectus states that the previous development pattern of the company was to win large projects and to leverage such projects as a part of its continued growth strategy.

The company started with the $50-m Jamaica Grande Project (2004), followed by Iberostar ($100m), Norman Manley International Airport (signed at $180m and ending at $335M), then University of the West Indies BMSC ($550m) and now Braco (rooms and public areas) which is expected to end up being more than $800m.

The management discussion says these projects “tend to be operated independently with their site administration, expenses with net profits falling directly to the company’s bottom line”.

CAC 2000 currently employs 45 employees, 10 of whom are certified engineers.

The company occupies leased office and warehouses located at 231 Marcus Garvey Drive, Kingston 11, over which it has an option to purchase; and in Montego Bay facilities located at shop no 3 at Lot 36 Miriam Way, Barnett Development.

The CAC 2000 prospectus says listing on the junior market will “raise its profile, while allowing it to raise funds in order to embark upon new business ventures and inject additional working capital into its business”.