Tue | Sep 24, 2019

Barita delays non-renounceable rights issue

Published:Wednesday | January 2, 2019 | 12:00 AMAvia Collinder/Business Reporter
Ian McNaughton, managing director of Barita Investments Limited.

Barita Investments Limited has delayed its non-renounceable rights issue in order to get shareholders' approval at an extraordinary general meeting, EGM, on January 17.

In a new notice on December 21, board directors said that "while we are assured that we have a sound legal basis to approve and proceed with a rights issue, the board of directors of Barita Limited, in continuing to foster and sustain excellent shareholders' relations," said that it would convene an EGM to consider the issue.

The EGM has on its agenda consideration of the issue of the non-renounceable shares and a request for shareholder's authorisation to board directors to dispose of shares which are not taken up at their discretion.

Non-renounceable rights are not transferable and therefore cannot be bought or sold.

If successful, the issue will raise $4 billion. The rights issue was originally for 258.06 million shares at $15.50 per share, available for subscription from January 8.

The offer was to close on January 22 for existing shareholders and on January 25 for excess shares not taken up by current stockholders.

The offer, if accepted, will dilute the shareholding because new shares will be issued, adding to the 445,876,824 shares currently in circulation.

On Monday, Managing Director Ian McNaughton told the Financial Gleaner that "we want to ensure that all of the shareholders who have shown confidence in the company over the transition period, and over the years, will have the opportunity to participate in a rights issue which gives them the shares at a very attractive rate".

He said that the issue is non-renounceable and hence shareholders will not be able to sell their right to investors outside of the group.

 

NEW INVESTING ENTITY

 

Asked, however, if directors would consider the sale of shares not taken up to a new investing entity, McNaughton declined to comment, saying that spoke to policy and was outside of his scope for comment.

"That is a question that I really could not answer at this point. That is a policy position and I would really prefer not to speak about something like that at this point." he said.

As to whether the money raised will be used for acquisitions, he said the aim was to improve capitalisation which would position the company to tap new opportunities.

Shares in Barita traded on Monday at $49.75 per unit, up 566 per cent from the beginning of 2018.

The share price quadrupled in price last year, powered by its mid-year acquisition by Cornerstone United Holdings Jamaica Limited (CUHJL)

Cornerstone's investment arm incorporated in St Lucia, Cornerstone Investments Holdings, acquired a 75 per cent stake in the company for more than $3 billion in August.

CUHJL also owns majority stake in the merchant banking outfit MF&G Trust and Finance Limited, acquired in 2016.

avia.collinder@gleanerjm.com