WIGTON Windfarm, the wholly owned subsidiary of Petroleum Corporation of Jamaica (PCJ), hopes to raise roughly $5.5 billion from its initial public offering which is set to open on April 17.

The IPO, which falls a little lower than that of Wisynco Limited in December 2017, has put up for sale a total of 11 billion shares, of which 2.2 billion are reserved for public sector workers, at a share price of $0.50 per share for all applicants.

Shares will be allocated in tranches of 10,000 for individuals looking to get a stake in the company before the IPO closes on May 1, 2019 at 4.30 pm.

The offeror, PCJ, expects to receive approximately $5,105,882,847 from the sale of the shares after deducting sale and listing expenses. The sale is being conducted in the capital of Wigton Windfarm.

“Directors of PCJ, at the direction of the Government, are undertaking the offer for sale followed by listing of the shares on the Stock Exchange in order to widen the ownership base of the company; and allow direct equity participation in the economy by encouraging local ownership and participation in the energy sector; and provide funds to PCJ,” Wigton said in its prospectus which was posted on the Jamaica Stock Exchange on Monday evening.

The shares will be listed on the main market of the JSE.

Wigton has advised that it has adopted a dividend policy that will target to pay out a dividend not exceeding 25 per cent of net profits after tax as it continues to pay down its debt. However, the company noted that its dividend policy is subject to the availability of sufficient distributable reserves for each financial year.

Up to December 19, 2018 the company was indebted to the PetroCaribe Fund in the aggregate principal sum of US$49.2 million under two loan agreements, part of which was used to fund the purchase and installation of nine wind turbines and later the purchase and installation of 12 two-megawatt wind turbines with the potential to generate savings or expand revenue flows to the Government.

In anticipation of the IPO, Wigton, in December 2018, launched a private placement of bonds to raise up to $6.5 billion in order to repay the loans owing to the PetroCaribe Fund. The placement was successful with the company raising $6,348,586,690.42 which was converted to US dollars through a Bank of Jamaica facility.

If the IPO is successful, Wigton would cease to be a public body and would not qualify to hold loans from PetroCaribe Fund.

The energy provider, however, cautioned potential shareholders to be aware that the price of the shares and the income derived from them can, in common with other shares, go up as well as down.

“There is no assurance that the investment objectives of the company will be actually achieved,” the company said.

Wigton named risks in relation to the first sale and market liquidity, ordinary stock price fluctuations, changes in Government regulations and policies, failure by Government to implement energy development plan in addition to risks of hurricane, fire and other acts of God.

“The shares, though listed on the Jamaica Stock Exchange, may not be readily saleable and shareholders who may want to ‘cash-out’ may not be able to do so or may only be able to do so at a discount,” Wigton said in its prospectus.

Wigton Windfarm is recognised as the largest wind energy facility in the English-speaking Caribbean. Located in Rose Hill, Manchester, the wind farm currently comprises three plants: the 20.7mw Phase I, which began operating in 2004, Phase II an 18mw extension facility commissioned in 2010 and the 24mw Phase III, which was commissioned in 2016 bringing the wind farm’s total capacity to 62.7mw.

The company’s main objective is to facilitate and promote the use of wind and other alternative forms of energy to drive the diversification of Jamaica’s energy mix.

Since becoming operational, Wigton has reduced national oil consumption by close to 406,000 barrels which has saved Jamaica almost $3 billion. Wigton’s financials showed that the company improved net profit by $639 million to total $826 million for its 2018 financial year over 2017.

The government announced plans to divest the wind energy facility, other government-owned projects and properties including the Coffee Industry Board, and government-owned lands at Silver Sands in Trelawny last year.

The PCJ offer is the third listing on the JSE since the start of the year but the first to be listed on the main market in 2019. Lead broker on the transaction is Mayberry Investments Limited.