Derrimon Trading Limited is offering 125 million preference shares in capital structured to raise $250 million for the repayment of existing debt on shares which mature later this month.

In a prospectus published on the Jamaica Stock Exchange, Derrimon Trading offered the fixed shares to investors at $2.00 per share, redeemable March 31, 2021. The offer opens March 26 at 9:00 am and closes at 4:30 pm on April 9.

Each 2021 preference share will carry a right to a cumulative preferential dividend at nine per cent per annum for the first and second year and 90 days weighted average treasury bill yield, or WATBY + 2.50 per cent per annum during year three.

“Preferential dividend will be due and payable quarterly in arrears on the final business day of March, June, September, and December in each year, save and except that the first payment date shall be June 29, 2018 and the final payment date shall be March 31, 2021,” the prospectus said.

The company disclosed that it reserves the right to make available a further 50 million in 2021 preference shares, on the same terms and conditions prior to the closing date. The overallotment option, if fully subscribed, will bring the offer up to a total of $350 million.

Derrimon’s current capital structure includes 275.4 million ordinary shares and 525 million redeemable preference shares. Derrimon’s 11.75 per cent preference shares which become due later this month, trades on the JSE and are currently valued at just under $269 million.

At an Extraordinary General Meeting earlier this month where shareholders approved the resolution for the creation of an additional 400 million shares, to 800.4 million units, Chairman and CEO Derrick Cotterell reasoned that the company decided to refinance its debt from a new share issue, rather than profits.

He added that the option would both preserve cash and take advantage of the lower interest rate environment, while allowing the group to avoid creating a non-distributable, statutory capital redemption reserve account, which would require Derrimon Trading to sterilise cash up to the amount redeemed.

Derrimon Trading, which started out as bulk distributor of commodities in Kingston, has since acquired the business of Sampars Cash N Carry, one of the largest wholesale businesses in Kingston.

After listing its stocks on the Junior Market of the Jamaica Stock Exchange in December 2013, Derrimon Trading acquired a 49.02 per cent stake in Caribbean Flavours and Fragrances Limited and later acquired another 16 per cent stake in the company, making it majority owner of CFF.

For the year ending December 2017, gains from the takeover of Caribbean Flavours & Fragrances Limited increased Derrimon Trading group revenue to $6.35 billion and net profit of $204.3 million.

As at February 13, 2018, the company’s market capitalisation was approximately $1.96 billion.