Mayberry Investments Limited (MIL) is planning to undertake a court-approved scheme of arrangement to reorganise the group of companies into a new and distinct structure.

The release, which was posted on the company’s website, stated that the reorganisation of the group of companies is to facilitate greater regulatory transparency and corporate agility with the ultimate aim of enhancing shareholder value. MIL is a 37-year-old securities dealer and primary dealer regulated by the Financial Services Commission and Bank of Jamaica. It is also a member dealer of the Jamaica Stock Exchange (JSE) and has been listed on the JSE since April 2005.

It has a wholly owned subsidiary Widebase Limited, which is a St Lucian international business company (IBC) that holds investments in unquoted equity securities including joint venture Cherry Hill Development Limited and a 13.26 per cent stake in recently listed EduFocal Limited. MIL holds a 63 per cent stake in St Lucian IBC Mayberrry Jamaican Equities Limited (MJE) which holds equity positions in listed JSE companies. MJE listed on the JSE in July 2018.

The reorganisation will involve the creation of a new parent company in St Lucia called Mayberry Group Limited (MGL). MGL will establish a new Jamaican holding company called Mayberry Holdings Limited (MHL). MJE and Widebase will become direct subsidiaries of Mayberry Group while MIL will become a wholly owned subsidiary of MHL.

Shareholders in MIL would receive an equivalent number of shares in MGL on the successful restructuring while MJE will continue to remain listed on the JSE with MGL becoming the new parent company. On the approval of the Supreme Court and JSE, MGL will list on the JSE by introduction in place of MIL. Shareholders would have to vote by three-fourths present in person or by proxy at the annual or extraordinary general meeting.

“The reorganisation will create a corporate platform which is not only consistent with international best practice in the financial regulated sector but will also establish a corporate framework which will ultimately enhance shareholder value. The group will now be able to pursue with greater confidence and agility opportunities for inorganic growth both in the regulated and unregulated sectors,” stated executive chairman of MIL and MJE Christopher Berry in the release. Berry controls Mayberry Asset Managers Limited along with Konrad Mark Berry which holds a special preference share and acts as investment managers in MJE.

Berry also pointed out that regulatory compliance costs would materially decrease as MIL would have no consolidated subsidiaries as a regulated entity. An additional benefit to MIL shareholders on the reorganisation is that they would no longer be subject to the 15 per cent withholding tax on their dividends held in their individual capacity. This is due to the Caricom double taxation treaty which already benefits MJE shareholders who pay no withholding tax on their dividends.

The release noted that the current set-up where MIL consolidates MJE and Widebase is not the regulatory preferred structure as regulators consider IBC’s opaque entities which impede regulatory oversight and transparency.

When asked about the context surrounding regulatory scrutiny, MIL Chief Executive Officer Gary Peart said, “The regulators haven’t said anything specific to Mayberry. Mayberry is not reacting to any specific request. We have noted their comments in general and they think IBC’s are vague and opaque. It’s not that somebody has written us about MJE or Widebase. What we’ve done is for the avoidance of doubt. We’re doing the restructuring so that the regulated entity, if the regulator chooses to, will not be hampered or impeded in any way, shape or form if they need to look in. There’s no value lost for the shareholders.”

Peart and Konrad control 39.40 per cent of MIL’s shareholding directly and 84.79 per cent when accounting for connected parties and Christopher Berry’s holdings.

The reorganisation will result in Mayberry Holdings Limited becoming a financial regulatory holding company and Mayberry Group taking opportunities in the unregulated or real sector. MIL is one of the most recent financial companies to undergo a group restructuring with the Victoria Mutual Building Society pursuing its own reorganisation which will result in the VM Group being the ultimate parent company of VM Financial Group Limited and an unnamed subsidiary to hold non-financial companies. JMMB Group will be putting all of its Jamaican regulated subsidiaries under JMMB Financial Holdings Limited to create a regulated financial holding company.

MJE’s first quarter saw it generating $944.40 million in net profit compared to a net loss of $631.08 million in the prior period as its associate companies measured at fair value through profit or loss rose significantly in value, largely from Caribbean Producers Jamaica Limited and Supreme Ventures Limited. MJE’s stock price is up 45 per cent year to date to $13.02, but the stock still trades below its net asset value of $17.96 as of June 30.

MIL’s first-quarter consolidated net profit increased to $1.07 billion, with net profit attributable to shareholders growing to $691.87 billion. MIL’s total asset base was up 28 per cent to $45.71 billion with its cash balance at $1.31 billion. Equity attributable to shareholders increased by 26 per cent to $17.19 billion. MIL’s stock price is up 19 per cent year-to-date to $9.31 which leaves it with a market capitalisation of $11.19 billion. MJE and MIL were the fourth-and fifth-best performing Main Market companies in the first half of 2022 as their stock prices rose 48 and 29 per cent, respectively.