FOLLOWING its March 2022 initial public offering (IPO) EduFocal Limited’s board of directors will continue its deliberations this Friday on a renounceable rights issue, and consider recommending a stock split to its shareholders.

The education technology company published a notice on the Jamaica Stock Exchange (JSE) last Wednesday before market open that the board would meet on October 19 to consider recommending a rights issue to its ordinary shareholders. This news resulted in the stock halting at market open (9:30 am) and rising by 19 per cent from $1.44 to $1.72 at the end of Wednesday.

A subsequent disclosure on Friday morning noted that the October 19 meeting was adjourned to October 27 when the possibility of a renounceable rights issue would be considered. The notice also stated that a stock split recommendation to shareholders would be discussed at the meeting.

This new disclosure saw EduFocal halt at $3 at 10:42 am on Friday when it had an intraday peak of $3.02, which is a new 52-week high, before it closed the day at $2.54. There were 153 trades on Friday when 4,737,278 shares worth $12,030,978.20 changed hands. The material disclosure resulted in EduFocal’s stock (LEARN) rising 89.55 per cent for the week, and pulled it out of a year-to-date loss to a gain of 14.41 per cent.

A rights issue is a capital raise whereby the company approaches its shareholders and seeks to raise new equity capital through the issuance of new shares, typically at a discount. A stock split is when the number of shares of a company increases by a particular factor while the price is reduced by that same factor.

FosRich Company Limited recently had a non-renounceable rights issue in August wherein it issued 55.73 million new ordinary shares and raised a gross amount of $139.32 million. Stationery and Office Supplies Limited had a 9-1 stock split on August 2. Thus, if someone owned 10,000 shares at $26.75, they would now own 90,000 shares at $2.97 per share.

EduFocal raised $116.45 million in new equity capital and converted $13.24 million in debt to ordinary shares during its IPO, which was priced at $1 per share. A total of $428.42 million in applications went after the IPO.

At the end of EduFocal’s second quarter its issued share capital stood at $185.63 million spread across 648.45 million ordinary shares. Under JSE Junior Market rules, EduFocal could only raise $314.37 million in new equity, which would carry it to the maximum $500-million limit. EduFocal’s top 10 shareholders own 74.47 per cent of the ordinary shares.

EduFocal recently incorporated two new subsidiaries — EduFocal Africa Inc in the USA and Edufocal Nigeria Limited — to pursue short- and medium-term opportunities with Chief Strategy Officer Dr Anne Bethune based in Lagos. It also formed a strategic partnership with Design Privacy Limited in March to deliver data protection e-learning content.

EduFocal’s revenue for the first half of 2023 was up 58 per cent to $210.70 million, with its net profit rising 468 per cent to $65.81 million. Total assets were up 25 per cent since December to $344.48 million, with cash and cash equivalents at $1.54 million. Total liabilities marginally grew to $270.21 million, with the bulk attributed to $182.52 million of debt. Shareholders’ equity increased from $7.62 million to $74.27 million.

Mark Green was appointed to the role of chief operations officer on April 24. The contract of EduFocal’s consultant Chief Financial Officer (CFO) Kayone Haynes Burke expired on June 17, with Fonnique Miller being promoted to the role on September 1. A director also purchased 68,576 shares on September 22.