Productive Business Solutions Limited (PBS) will be returning to the equity markets later this year as it seeks to deepen its presence in Latin America, the Caribbean, and South America.

The company published a notice of extraordinary general meeting (EGM) on Wednesday outlining an intention to seek permission from shareholders for the company to issue up to 40 million cumulative redeemable preference shares denominated in US dollars. The preference shares are priced in with an 8.25 per cent interest rate. The EGM notice also seeks to allow for the company’s restated articles to be approved, allow the directors to determine the terms and conditions relating to the new preference share raise and any director be authorised to do all things to effect the amendment of articles, including delivery of the articles to the Barbados Corporate Affairs and Intellectual Property Office.

Preference shares can either be classified as liabilities or equity for a company based on how it is structured. PBS 2017 preference share raise saw it issue cumulative redeemable preference shares which meant that it was a liability due to it having a seven-year tenure. The 2022 preference share raise involving the perpetual cumulative redeemable preference shares are classified as equity for PBS since the company cannot redeem the preference shares for at least 15 years. PBS preference shareholders must receive their preferred dividend before its ordinary shareholders can receive an ordinary dividend.

While the terms of the 2024 preference share raise will not be known until after the EGM and subsequent prospectus, this would be PBS’ third preference share raise since August 2017. PBS raised J$2.58 billion (US$15.43 million) in its August 2017 cumulative redeemable preference share raise and subsequent US$18.31 million raise in September 2022 where they issued US$15 million and J$500 million (US$3.31 million) of perpetual cumulative redeemable preference shares.

The 2022 raise saw PBS shareholders approve the company to issue up to five million Jamaican dollar (JMD) and five million United States dollar (USD) perpetual cumulative redeemable preference shares. The JMD preference shares were approved at a 10 per cent interest rate while the USD preference shares were approved at a 9 per cent interest rate. However, when the actual raise took place, the 500,000 JMD preference shares were issued at 10.50 per cent while the 1.5 million USD preference shares were issued at 9.25 per cent.

Thus, the proposed rate on the new preference share issuance might change by time the prospectus is published. The PBS EGM will be held virtually at 11 am Barbadian time or 10 am Jamaican time.

The move by PBS to raise new preference shares precedes the planned acquisition of Xerox del Peru, SA and Xerox del Ecuador, SA from Xerox Holdings Corporation. The transaction is set to be completed by the end of June once authorisation is received from the Ecuadorian competition authority. PBS is the largest Xerox distributor in the Western Hemisphere.

Xerox Holdings sold Xerox Argentina Industrial y Comercial SA and Xerox de Chile SA to Grupo Datco in March 2024 as it seeks to reorganise itself, with the announced divestitures of four South American operations meant to result in a partner-led distribution model in these countries. The four companies sold under these agreements will continue to operate as independent companies and will continue to service Xerox devices in those markets while becoming the exclusive Xerox provider in those markets. Xerox is currently negotiating similar arrangements regarding the change in its distribution model in Europe.

“One, it gives us more reach and more expansion with a capable client or partner in that region. But it also allows us to, as we talked about in geo-simplification, focus on those growth areas that we can accelerate where we put all of our resources into like IT, digital services, driving more of the things that our clients need in core countries. So that’s why we made the strategic change, and we’ll continue to accelerate that through the balance of LatAm and looking at Europe as well,” said Xerox Chief Executive Officer Steve Bandrowczak at its April 23 earnings call.

Xerox’s first quarter report shows that it sold its Argentinian and Chilean operations for US$16 million (J$2.45 billion) which resulted in a net loss on disposal of US$54 million (J$8.27 billion). This included a net currency translation loss of US$40 million, allocated goodwill of US$10 million and the carrying value of the net assets of US$18 million. There were related fees of US$2 million in these sales.

Xerox will hold its 2024 shareholders meeting on May 22 at 9 am Eastern standard time. Xerox just paid a US$0.25 dividend or US$31.05 million on April 30 to shareholders.

PBS’ 2023 audited financials have been delayed twice with a new publication date expected for May 30. As a result, PBS’ Q1 report has been delayed by a month and should be published by June 17.

PBS unaudited full year report shows it generating US$333.33 million in revenue with net profit attributable to shareholders of US$11.34 million. PBS 2023 EBITDA (earnings before interest, tax, depreciation and amortisation) came in marginally higher at US$48.27 million. PBS’s total assets closed 2023 at US$402.93 million with equity attributable to shareholders at US$114.27 million.

PBS is set to move into two floors of Stanley Motta Limited’s (SML) new unit one building during 2024. SML has also proposed to increase their authorised share capital by 500 million ordinary shares to 1.26 billion ordinary shares at its September 25 annual general meeting (AGM), a move seen as a possible precursor of an equity raise.

PBS’s ordinary shares closed Thursday at US$1.60 which leaves the stock down one per cent in 2024 with a market capitalisation of US$297.94 million. The PBS 9.75 per cent preference share (2017 raise) closed at J$104 which is above the par value of J$100. These preference shares mature on July 31, 2024, with another dividend payment set to take place in June. Eppley Limited’s 7.50 per cent preference shares are set to be redeemed in November at J$6 per share with an outstanding value of J$500 million.