TransJamaica Highway Limited (TJH) is looking to ask its shareholders at its June 30 annual general meeting (AGM) to approve amendments to its articles of incorporation surrounding share buy-backs and directors' age limitation.
TJH is the most recent company on the Jamaica Stock Exchange (JSE) to mention the consideration of a share buy-back. The other companies include GraceKennedy Limited, Sygnus Credit Investments Limited and JMMB Group Limited.
Under the current Article 65, TJH can repurchase its shares by a tender invitation to all stockholders which requests them to offer their shares to the company in response to the tender offer. However, most share buy-back programmes are done on the open market where they are repurchased from persons selling the stock.
"Thus, the first amendment to the articles seeks to delete the existing Article 65 and replacing that article with a new article which would allow the company to repurchase shares by tender offer or by open market purchase or such other method as may be approved by the stockbrokers in general meeting by an ordinary resolution. This amendment will give the company more flexibility, through the board, if it is decided to undertake a stock repurchase programme," said Chairman Charles Paradis in his letter on the special resolution six.
With respect to Article 106, a director who has attained age 70 cannot be appointed as a director and cannot be appointed beyond that age unless approved by shareholders. A director also is prohibited from being appointed to the board beyond age 75.
"The directors are unanimously of the view that this article is unnecessarily restrictive and is contrary to the articles of most companies listed on the Jamaican Stock Exchange which do not have directors' age limit. This article causes the company to discriminate against persons who otherwise are competent, extremely qualified and experienced to serve on the board. It perpetuates stereotypes about older or younger persons and is illegal in many countries. Accordingly, the directors are recommending that this Article be deleted from the Company's Articles of Incorporation," said Paradis' letter on the age limitation.
TJH's AGM will be held at the Jamaica Pegasus hotel at 10 am where Paradis, Ian Dear, Alok Jain, Steven Gooden and Patrick Hylton will be up for re-election as directors of the company.
The share buy-back amendment comes at a time when TJH's stock price has experienced a significant rise in its stock prices when a director purchased 20 million shares on March 20 and other directors purchased shares as well. TJH's JMD stock price was up 27 per cent to $1.77 on Monday while the USD share price was up 17 per cent to US$0.0112. This is above the initial public offering (IPO) price of J$1.41/US$0.01 per share. The JMD price peaked at $1.91 in April 2022 and hit $1.81 on Tuesday. The top 10 shareholders interest increased to 54.5884 per cent or 6,824,110,019 ordinary shares at the end of 2022.
TJH's dividend yield in 2022 was 6.20 per cent based on the $0.0855 dividend (US$7-million payment) and $1.38 stock price. This is in line with the 2020 to 2025 dividend yield range of 5.3 – 8.7 per cent which should jump to 24.5 – 35.8 per cent thereafter.
TJH's standalone revenue increased 23 per cent to US$65.01 million (J$9.75 billion) which is above the 2022 IPO projection of US$61.9 million, but it recorded a net loss of US$7.19 million compared to the US$3.99 million net profit in 2021. This was influenced by the one time US$13.88 million acquisition related loss of Jamaica Infrastructure Operator Limited (JIO). The JIO acquisition resulted in 31 employees being added to the roster which stood at 227 by the end of 2022. Colin Murray is the managing director of JIO while Ivan Anderson is the managing director of TJH.
TJH acquired 51 per cent of the business from Vinci Concessions SAS through its call option in December with the overall acquisition costing US$16.1 million. The remaining 49 per cent stake with Bouygues Travaux Publics will be exercised through TJH's call option or Bouygues put option and receiving the required approval from National Road Operating and Constructing Company Limited (NROCC) on amendments to the concession agreement.
The annual report mentioned that the acquisition of JIO will lead to US$12 million (J$1.80 billion) in cost savings, increased EBITDA (earnings before interest, tax, depreciation and amortization) margins, higher debt service coverage ratios and protection of the operating margins in less. This will be achieved from a new monthly lump sum fee of US$ $447,500 payable in arrears and a monthly variable fee corresponding to five per cent of the theoretical toll revenues. This fee structure transfers more risk to JIO and should result in over 50 per cent cost savings to the group.
TJH's projected traffic from its IPO of 25.44 million vehicles was surpassed as 25.88 million vehicles traversed through the four toll plazas in 2022. TJH's revenue was also 22 per cent above 2019 figures which was the last normalised year before the COVID-19 pandemic. The Portmore toll plaza made up 52 per cent of toll transactions in 2022 with Vineyards, May Pen and Spanish Town making up 20 per cent, 18 per cent and 10 per cent of toll transactions.
With several new housing developments planned along T1 (Kingston to May Pen route), TJH is currently exploring the feasibility of establishing access and egress points or interchange lanes at various locations along the highway. These include Hartlands Road, Salt Pond Road and New Westbound facing ramps at Freetown. TJH has engaged SJE Engineering Consultants to provide design and technical support for the implementation of the ramps at Hartland and Salt Pond.
TJH has also signed a lease agreement with the Port Authority of Jamaica to have a new gas station opened along the Portmore Causeway going Westbound. The preferred bidder for this new station is Rubis Energy Jamaica Limited with Total Energies operating the first existing station at Old Harbour going Eastbound.
TJH managed to cut down on the amount of perimeter fence stolen in 2022 to only 268 metres due to the intervention of the police and community engagement. In 2014, 6,981 metres of perimeter fencing was stolen.
In a bid to increase the value of t-Tags, TJH was able to receive approval from the Toll Authority of Jamaica to allow t-Tag Class one and two customers to pay $20 and $30 less respectively than the standard rates at the Portmore Toll Plaza. It also conducted a pilot between August to December of distributing t-Tag's via in-lane sales. With sales tripling in some cases, a permanent booth at all toll plazas for t-Tag sales will be implemented in the first half of 2023. This is on top of launching a mobile application and web platform which resulted in the online top-up of the tag increasing from 16 per cent in 2021 to 33 per cent in 2022.
TJH will also be commencing discussions this year around the right of first refusal to operate phase 1C which is 28km of new toll road from May Pen, Clarendon to Williamsfield, Manchester and is set to be completed by summer. This connection would push the length of road operated to 77.9 km. The company will also be developing its new head office on lands adjacent to the Portmore Toll Plaza.