FosRich Company Limited has launched its non-renounceable rights issue as it seeks to raise $139.32 million to fund the completion of its new 30,000-square-foot fulfilment centre.

The offer, which opens next Tuesday, will see existing shareholders as of June 2 able to purchase new ordinary shares in the company at $2.50 per share. Shareholders are entitled to one new ordinary share for every 90 ordinary shares held at the record date with persons able to purchase additional shares from the unallocated pool of excess shares.

Thus, a shareholder who held 9,000 ordinary shares at the record date would be allocated 100 new shares and could apply for excess shares in their application. According to the rights issue circular, Cecil and Marion Foster, who are the majority shareholders in FosRich, have indicated their intention to take up their entitlement.

The 55,729,647 ordinary shares are to be issued in this offer which is relative to the existing 5,022,755,550 ordinary shares. The offer is set to bring in a net amount of $130.38 million which will push the company’s share capital to the maximum $500-million limit allowed for Junior Market companies. FosRich listed on the Jamaica Stock Exchange (JSE) in December 2017 at $2 which is adjusted to $0.20 after accounting for the 10:1 stock split.

While rights issues tend to be issued at discounted prices to the market, FosRich’s rights issue price came at a premium to the $2.18 closing price on Tuesday with the stock down 44 per cent year to date from $3.91. Despite this relative premium, FosRich’s share price increased to $2.25 on Wednesday and traded as high as $2.46 and had a closing price of $2.42 on Thursday.

The offer was delayed by an additional three months due to the termination of Stocks & Securities Limited (SSL) as a member-dealer of the JSE. SSL’s stake of 22,689,783 ordinary shares was disposed of in a fire sale on February 24 with an intra-day low of $2.50.

FosRich unveiled massive expansion plans for the next four years recently where the company is seeking to generate $20 billion in revenue and $2 billion in net profit. Its first quarter revenue was up 20 per cent to $1.08 billion with net profit coming in at $121.72 million. The company is set to manufacture electrical coils and repair transformers in the coming weeks along with the announcement of new renewable energy opportunities with Huawei.

Applications for the rights issue are to be handled through Mayberry Investments Limited’s online portal, with different forms included in the circular. Shareholders who held their shares with SSL will be able to apply for the offer by completing a designation form to indicate a non-SSL brokerage account to hold the new shares. The non-SSL brokerage account should have the same name and Tax Registration Number (TRN) as the original SSL account. The offer has a $172.50 JCSD processing fee and is set to close by August 18, with an option to close earlier or extend the offer as deemed fit by the company.