FOSRICH has incorporated its FosRich USA arm, with a view to pursuing various business opportunities in the United States of America and across the world. The company made the disclosure to the Jamaica Stock Exchange late last week. The notice comes just days ahead of FosRich also indicating that its planned rights issue will be for those on record as owning its shares on June 2.
"We have set up the company to be a minority supplier to the federal government," Foster told the Jamaica Observer when asked for details about the FosRich USA arm. He said the company was registered in Delaware in the US north-east but will be operating out of Manhattan and will initially target projects in the tri-state area of New York, New Jersey and Connecticut.
"We want to be part of the minority programme under which the federal government has set aside US$1 trillion to purchase products and services supplied by minority-owned business in the USA," he continued. And noting that the opportunity was taken because of the infrastructure buildout that is taking place across the US, Foster outlined: "So we are here trying to use our PVC pipes for the infrastructure aspect of building out bridges and roads and also to leverage our relationship with Siemens and Philips to see how we can supply directly to these projects, whether they be housing projects, roads or airport expansion." FosRich produces polyvinyl chloride (PVC) pipes and fittings under the Solid brand.
But the entity was not only set up to go after projects in the United States. Foster told the Business Observer that the intention is to also go after similar projects financed by the United Nations (UN) in developing countries.
"The UN procures about US$30.4 billion worth of products and services each year, including pipes like the one's FosRich produces," Foster shared. Those projects are implemented in countries from Latin America to Africa to Asia.
"However, to be one of the companies which can bid to supply these projects you have to have an American company — and that is why we set up this company in America," he added. This company, he points out, will allow FosRich to compete with other suppliers for UN projects which typically come from developed countries.
Foster said the UN ambassador to Jamaica was very happy to see FosRich making the step, after years of lobbying to the New York-based multinational agency to allow companies from developing countries to also benefit from its work across the globe.
"Right now we are at this time here in New York going through the process of being certified to be on the UN's system, and we are undergoing the training so we can participate when they call for proposals for these UN projects across the world."
He said the expectation is that by the third quarter of this year — from July to September — FosRich USA "will be at the table" to start bidding on UN projects across the world, though he stressed that no deals have been struck as yet.
But he said the company has been making projections about the possible impact the US business will have on its overall bottom line.
"This entity could drive between 20 per cent and 30 per cent of our business in the medium term," Foster said indicating that the numbers are not set in stone and are really dependent on how the company's bids will be received.
Ahead of that, Foster said the company has also finalised the record date for its upcoming rights issue. The record date refers to when shareholders are recognised as being owners of FosRich shares, with June 2 set as that date.
Foster said the intention is to raise $139 million in that rights issue. Given that FosRich already raised $369.6 million out of the maximum $500 million allowed for companies listed on the Junior Market of the Jamaica Stock Exchange, the maximum the company can raise is $130.4 million. Foster said the difference will go towards paying fees and other costs associated with raising the capital.