Amid the push by existing listed companies to raise new capital through the issuance of equity, RJR Limited has become the latest company to signal its intention to join the foray as it seeks shareholders approval at its annual general meeting later this month.

The company, which is the parent of the RJR Gleaner Communications Group, has included two special resolutions and a special business item to increase its authorised share capital from 2.42 billion shares to 3.63 billion. This represents a 50 per cent increase in share capital or 1.21 billion new shares.

One of the special resolutions will also make amendments to the company’s shareholder cap, which currently limits any single shareholder from owning more than 10 per cent of the company to 21 per cent.

However, the amendment won’t take effect until the government minister who has oversight for information amends the licence issued to RJR under the Broadcasting and Radio Re-diffusion Act.

This will also mark the seventh company so far which has announced intentions to consider an additional public offering (APO) to increase their capital base during the period.

At the company’s current price of $1.25, a possible APO raise would yield about $1.51 billion, with a 20 per cent discount to the price raising about $1.21 billion.

Persevance Limited and Financial & Advisory Services Limited currently own 6.8 per cent each in RJR with the overall top 10 shareholders collectively owning 46.25 per cent of the company’s issued share capital.

This will be the group’s second share increase, following the amalgamation and merger of the Gleaner’s media arm into the RJR Group in 2016. Gleaner shareholders were compensated with one new RJR share for every three Gleaner shares they owned at the time. There will also be a resolution to appoint KPMG as the group’s new auditors who will take over from PricewaterHouse Coopers.

GROUP OPERATIONS SEVERELY IMPACTED BY COVID-19

This capital infusion, if achieved, would help strengthen the group which has taken a hit from COVID-19.

Apart from the 94 per cent fall in net profit for the group to $1.5 million and 37 per cent increase in net loss for the company to $11.1 million in the most recent quarter, the group laid off 93 employees in early May and instituted pay cuts to make up for the decline in commercial activity.

The month of March saw $50 million in cancellations of advertisement bookings. The decline has been more pronounced for their print and other segments (Gleaner) which has seen their operating profit collapse from $22.1 million to a $55.2 million loss. The audio and audio-visual segments have seen greater improvements over the prior year, with the audio-visual segment becoming more critical in the nation’s push to educate and keep the country informed throughout the period.

Group Chairman Joseph Matalon pointed out in the 2020 annual report that the delay in the digital switchover for television has become an area of concern. The original target which was set for three to five years in late 2016 has constantly fallen off target as the Government’s action on the item has been less than receptive. With the current novel coronavirus pandemic, it’s unknown if this push will be accelerated as the nation’s students are limited by lack of access to smart devices. Despite this fall-off, RJR’s investments in Keez and Gustazos remain solid in the group’s focus on gaining exposure to e-commerce-based businesses.