Less than seven months after acquiring Visual Vibe.com Limited, iCreate Limited is looking to potentially spin-off its remaining ownership in the subsidiary to its shareholders.

The notice, which came out on the Jamaica Stock Exchange (JSE) last Friday, noted that iCreate’s board of directors will meet next Tuesday to consider the decision. iCreate’s board now consists of Executive Chairman Tyrone Wilson, Larren Peart, Adrian Smith and recently appointed independent non-executive directors Anthony Dunn and Donovan White.

“Upon consideration and approval by the Board of Directors, an Extraordinary General Meeting (“EGM”) will be convened for the shareholders to consider and if thought fit, pass the resolution approving the issue or transfer of iCreate’s shares in Visual Vibe to be held by the shareholders of iCreate, pro rata to their existing shareholdings,” the notice stated.

iCreate had noted in its third quarter report that it was planning to sell 20 per cent of its shares in Visual Vibe.com. However, it was announced on December 1 that a strategic investment group led by Dunn had purchased 30 per cent of Visual Vibe.com and would be joining the board of the iCreate subsidiary. This announcement came less than a week after most of iCreate’s board was removed along with the auditor at the company’s annual general meeting (AGM). Ivan Carter and Arlene Martin resigned from the boards of Visual Vibe.com and GetPaid Limited on the same day. iCreate company secretary Demetrie Adams will be departing his role on December 31.

Visual Vibe.com pulled in $9.3 million in revenue and $2.6 million in net profit for June while delivering $37.51 million in revenue and $15.13 million in net profit for the third quarter. While these positive figures were great for iCreate, it wasn’t enough to stop the group from incurring a net loss of $14 million for Q3, where $6.2 million was related to acquisition-related expenses with Visual Vibe. For the overall nine months, iCreate had a net loss of $150.2 million due to $107.5 million in additional expenses related to the acquisition of Visual Vibe.com, in particular, a US$1.27-million vendor note. A Loop Jamaica publication noted that the investment led by Dunn resulted in the vendor financing being cleared.

iCreate’s third quarter reported that $588.6 million was spent to acquire Visual Vibe.com which included goodwill of $509.8 million. Goodwill represents a premium paid above the net assets of an acquired business and represents the value ascribed by the buyer to the potential prospects of the business. The 73 per cent of iCreate’s $700 million balance sheet is related to this goodwill which is an intangible asset. Thus, depending on how the remaining 70 per cent of Visual Vibe is spun off, there might be a significant reduction in iCreate’s total assets.

Spin-offs are not new to the JSE with the last scenario happening in 2019 with Blue Power Group Limited which spun off its hardware division into Lumber Depot Limited. Blue Power shareholders as of August 1 received a pro-rated/equivalent number of shares in Lumber Depot based on their existing shareholding. Lumber Depot subsequently listed on the Junior Market in December 2019.

At the time, Blue Power’s stock price started July 2019 at $4.96 before rising to $6.29 on July 18, weeks after the publication of its audited financials. However, the publication of the AGM notice resulted in the stock price rallying to $14.40 on July 30, with the stock peaking at $16.30 on July 26. By the AGM date of August 14, the stock was down to $8.13 and subsequently ended 2019 at $4.54, just below the $4.99 it started the year at.

iCreate’s stock price spiked by 33 per cent on Monday from $0.69 to $0.92, including a stock halt at the 9:30 am open and intraday high of $0.95. The volume of 3.46 million also included a sale of 1.40 million shares which is likely by a top 30 shareholder. However, it halted downwards on Tuesday and closed the day down 13 per cent to $0.80. This left the stock down 55 per cent in 2023 from its $1.77 start and far from the $4.90 peak in June 2022. It also remains below the $1 conversion price for last year’s convertible debt financing where Kintyre Holdings Limited, AHL (SPV) Limited, JPS Pension Fund, PAM – Pooled Equity Fund and other individuals participated in the offer. This financing was mainly used to complete the acquisition of Visual Vibe.com.