Shareholders of Main Event Entertainment Group Limited (MEEG) will vote on July 4 on whether the company should increase its authorised share capital limit and give way for a new potential equity raise.

Main Event raised $120 million at $2 per share in January 2017 when it went public in its initial public offering (IPO). As a result of the IPO, the company’s issued share capital increased to 300,005,000 ordinary shares, which was very close to the authorised share capital of 320,004,000 ordinary shares. The authorised share capital is effectively the limit that the any company can issue in shares. Thus, Main Event only has space to issue an extra 19,999,000 ordinary shares if it wanted to raise additional equity capital.

Now, the event management company is proposing a special resolution that would increase the authorised share capital to an unlimited amount which would allow the company to continue raising equity capital into perpetuity or split its shares to make the stock price nominally cheaper. Main Event’s largest shareholder as of January is MEEG Holdings Limited with 68.5054 per cent interest in the company. MEEG Holdings is a St Lucian international business company (IBC) co-owned by founding directors Solomon Sharpe and Richard Bair. MEEG Holdings was set to be struck off earlier this year but has had its IBC status updated and posted its annual registration fee and annual returns last month.

MEEG has had a significant transformation since listing on the JSE in January 2017 as Jamaica’s events scene has continued to evolve with more high-profile events such as BZR Weekend and Burna Boy. The company generated $1.18 billion in revenue and $108.18 million in profit before tax in its October 2017 financial year with $718.91 million in total assets and $446.33 million in shareholder’s equity. It paid a $0.06 dividend or $18 million in March 2019.

At the end of October 2023, Main Event’s revenue grew to $1.92 billion with profit before tax peaking at $233.19 million against the backdrop of $1.16 billion in total assets and $848.41 million in shareholder’s equity. The growth in revenue was driven by its entertainment promotions which hit a record $1.30 billion. M Style Rental and Décor, which was launched in April 2018, delivered a historic $170.19 million. Main Event paid a $0.12 dividend or $36 million on February 15.

The company’s share price also peaked on July 3, 2023, at $17.50 and closed Tuesday at $13.59, which leaves it with a market capitalisation of $4.08 billion and 579.50 per cent above its IPO price. This has tremendously benefitted Mayberry Jamaican Equities Limited which has been holding since IPO and Supreme Ventures Limited (SVL) who purchased a 10 per cent stake in April 2021 at $3.50 from MEEG Holdings. SVL is run by Executive Chairman Gary Peart, who is also the chief executive officer (CEO) of Mayberry Investments Limited, the company which listed Main Event.

Prior to Finance Minister Dr Nigel Clarke’s budget presentation in March, the Junior Market share capital limit is $500 million with Main Event’s share capital at $103.65 million. With the finance minister intending to raise the threshold to $750 million, Main Event would have space to raise up to $646.35 million, significantly more than the $500 million in low interest money Sharpe mentioned he wanted in October 2022 to aggressively expand Main Event.

“For 2024, we plan on expanding and extending the work we do with new and existing clients through strategic collaboration agreements. We hope to have a more diverse client base and be involved in new and exciting products. Our strategic goals are centred around being responsive to the changing climate and pursuing new ideas and ventures that will capitalise on the hard work of our team and board members over the last three years,” said Main Event’s 2023 annual report.

Main Event’s first quarter report showed revenue declining by nine per cent from $626.99 million to $567.75 million on what it attributed to a one-off event for a major client in the comparative period. Thus, Main Event’s profit before tax shrunk 13 per cent to $112.22 million with net profit coming in 15 per cent lower at $100.25 million with an earnings per share of $0.33.

Main Event’s total assets grew six per cent sequentially to $1.23 billion with current assets rising to $789.62 million, inclusive of $425.41 million in cash and short-term deposits. Total liabilities increased two per cent to $314.71 million with total debt down to $61.25 million and payables at $156.38 million. Shareholder’s equity increased eight per cent to $912.66 million.

Main Event’s top 12 shareholders increased their interest from 93.4129 per cent in October 2023 to 93.7543 per cent or 281,267,665 ordinary shares at the end of January.

Main Event’s board is currently made up of eight directors with three executives and four independent directors. Main Event separated its audit and finance committees on January 16, Gladstone Lewars leading audit and Dr Ian Blair leading the finance committee. Shareholders can attend the annual general meeting at the AC Hotel at 2 pm on July 4.

More companies making space for equity raises

The move by Main Event to adjust its authorised share capital coincides with the increase in companies seeking to make room for additional equity raises. Seprod increased its authorised share capital by 220 million shares at its September 2023 annual general meeting (AGM) and received permission to allot and list the shares on the Jamaica Stock Exchange. This was mere months before the takeover bid by Musson Investments Limited at $78 per share.

EduFocal Limited received approval at its November 29 AGM to have a stock split and issue up to 500 million shares for a renounceable rights issue. MFS Capital Partners Limited received approval from shareholders at its February 27 AGM to make its authorised share capital limit unlimited and allow for it to issue up to 380 million shares in a renounceable rights issue. Mailpac Group Limited is set to issue new ordinary shares later this year to the former owners of MyCart Express Limited following the acquisition which was completed on April 1.