Shareholders of Jamaica Teas Limited at its upcoming annual general meeting will be expected to vote on whether the company should proceed with a stock split and a new rights issue — which CEO John Mahfood said are intended to place the company on a better footing.

In the process, he said, a better capitalised real estate arm will become available for sale in the near future. The stock split is to improve the available pool of tradable shares, he also said.

On Monday, February 8, the Board of Directors of Jamaican Teas Ltd met and approved the stock split as an issue to be placed before its shareholders for approval; signed off on a second tranche of stock options for directors; and also gave approval for a renounceable rights issue.

The rights issue is intended to raise money for three main purposes, including retiring more expensive debt of about $140 million, Mahfood told the

Jamaica Observer on Monday.

“The second thing is to have funds available so that we can take advantage of any investment opportunity which may arise. Third is to properly capitalise the real estate arm with a view to spinning it off.”

Mahfood did not disclose the total sum under consideration for the rights issue, but said the offer was slated for the second half of 2016.

Jamaica Teas has 274,509,840 common shares outstanding with market value of $4.62 billion.

The main reason for the proposed stock split, the CEO said, was to increase the number of tradable shares available on the market. “As with a lot of junior market companies which issued about 20 per cent of their shareholding (in order to list), a lot was bought by financial institutions who are not trading them.” The split, he said, will hopefully create more activity on the market.

Jamaica Teas listed on the Junior Market of the Jamaica Stock Exchange (JSE) in 2010 at a listing price of $3.37 per share.

On Monday the stock traded for $6 per unit, reflecting a 17.65 per cent improvement in the last 12 months. While almost doubling its IPO price and bouncing back from a low of $2.51 per unit in 2015, Jamaica Teas still underperformed other Junior market stocks such as Caribbean Cream Ltd which improved 406.67 per cent and Caribbean Flavours and Fragances which saw price improvement of 302.98 per cent at year end 2015.

Jamaica Teas is managed in three main business segments; manufacturing — which includes packaging and distribution of teas and other consumable items; retailing — which involves supermarket subsidiaries; and rental and development — including rental income and the development of properties for resale .

Mahfood said that the company had no plans to expand the supermarket arm but would keep it for the duration. Instead, its core focus will be on manufacturing and increasing exports. Jamaica Teas manufactures about 40 types of tea, many of which are exported.

For the first quarter ended December 31, the company saw a 54 per cent jump in net profit year over year, from $27.45 million in 2014 to $36.56 million in December. This was from sales of a total $387.55 million, which also improved 21.6 per cent over 2014.

Most of the sales — $204 million — came from the manufacturing arm, of which exports accounted for 53 per cent or $109 million.

The company said that the recent receipt of splinter titles for its Orchid estate development was expected to further improve sales in the second quarter.