Barita rights issue closes in March

Barita Investments – 2018 best performing JSE stock.

Barita Investments held an Extraordinary General Meeting on January 17, 2019 and passed the Resolution to issue up to 262,280,484 ordinary shares as a Rights Issue to Stockholders and gave the power to the directors to set the other terms.
Subsequent to the meeting, the directors agreed the terms of the issue with offer opening on February 25 and closing on March 18 to shareholders on record at February 5 at a price of J$15.50 per share. Shareholders will be entitled to ten shares for every seventeen shares owned on the record date. Shares not taken up by existing shareholders will be available to other shareholders who apply for excess shares. The deadline for applications for any excess shares is March 25.
Barita’s stock has been trading in the $50 region for sometime, spurred partially by announcement of the rights issue plus other positive developments for the company, including new business.
Barita’s share was the best performing on the Jamaica Stock Exchange in 2018, with gains of 593 percent.

CMP flouting law – no AGM for 11 years

For the nine months to December 2007 CMP Industries reported profit of $5.2 million representing an improvement over the results for the similar period in 2006. The company had $23 million in cash and no interest bearing debt.
From all indications, CMP was generating rental income from property owned at Marcus Garvey Drive that been rented successfully since. By now, the company should have piled up a large amount of cash with several years having passed, are those funds been well managed? That is a big question. Shareholders have no way of knowing since the company has not presented any new financial information nor held a general meeting to update them.
The 2007 results are the last that minority shareholders have received, when the company was listed on the Jamaica Stock Exchange. Apparently, Cash Plus owned entity acquired the majority shares but the Trustees in Bankruptcy has taken control over the company but has supplied no updates on the company finances nor called a general meeting of the company. That leaves the company in breach of the companies Act that require annual general meetings to be held annually.
Recent contact with the Trustees in Bankruptcy indicates that they are controlling the company to realise funds to pay off debtors of Cash Plus. If that is true and it can’t really be so unless they sell the shares of the controlling interest, as the company belongs to all shareholders and any cash inflow if distributed has to be done equally to all shareholders as CMP is not indebted to Cash Plus debtors.
CMP Holdings Limited, was incorporated under the laws of St. Lucia, and which owns and controls approximately eighty percent (80%) of the shares in CMP Industries in 2007 sold the shares to Castelo Holdings, was said to have acquired 80 percent interest in CMP.
CMP shares were suspended from trading on the JSE in 2008, pending an offer to minority shareholders that never came. Minority shareholders need to know what is happening to their investment in the company and the Trustees in Bankruptcy cannot continue to flout the law.

Sterling comments on rights issue

Sterling Investments

Thanks very much for your feedback and observations IC Insider. Here are a few facts to aid the analysis:
1. SIL shareholders have known about the upcoming rights issue for over 3 months, the longest notice given by any company in the last 2 years!
2. SIL shareholders voted at an EGM on October 8, 2018 to conduct a rights issue. All shareholders, large and small, had a chance to physically attend the meeting and vote on the resolutions proposed. The Board welcomed the decision of the shareholders to do the rights issue and take advantage of great investment opportunities available in the global marketplace!
3. On December 12, the company published the details of the rights issue on the JSE website and the allotment formula for all shareholders. The notice informed shareholders that they would be able to purchase 2 shares for every 3 shares they owned. It also stated that the rights would apply to all shareholders that owned shares as at December 27, 2018. We received many calls from excited shareholders who wanted to participate!
4. SIL placed 2 full page advertisements in the newspaper to remind shareholders: On December 27, 2018 Sterling Investments Limited placed an ad in the Gleaner advising shareholders that the information was available on the JSE website, the SIL website.

Marion Ross of Sterling Investments.

5. On January 3, 2018 the JCSD mailed letters to shareholders with the forms they needed to complete. These forms are also available on the JSE website. Some shareholders have confirmed receipt of the documents and some shareholders may not have received them yet due to delays in the local postal service.
6. Sterling Investments remains committed to ensuring all shareholders are given equal and sufficient opportunity to participate in this great investment company. Existing SIL Shareholders will have until January 18th 2019 to renunciate their rights and can apply for shares in the excess pool until January 25th.
7. We are grateful to IC for their shareholder advocacy.
Publishers’ comments: thansk for the feedback. While SIL took steps to inform shareholders it does not chnage the facts that the information that was mailed, was sent out late and had critical pages missing or pages with only partial information thereon.

Another stock exchange fiasco

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Sterling Investments

The Jamaica Central Securities Depository (JCSD) finds itself in another fiasco regarding the issue of new shares, following the mess up of the recent Seprod share issue where amounts originally allocated to investors were changed.
The latest mess is the documentation and their dispatch for the rights issue of Sterling Investments shares. The notice for the issue that opened on January 4 and closes on January 11, was only posted on January 3, clearly late for some investors.
The lateness of course is a problem the company could easily fix by extending the deadline date. So far, no official position to extend the deadline date, has been taken. The latest bit of information reaching IC, suggests that the date will have to be pushed back.
Two documents were sent to shareholders. A cover letter, describing the issue and mentioning that shareholders can apply for excess shares over their allotment. The application forms sent did not include the page for shareholders to

The Jamaica Stock Exchnage subsidiary

apply for excess shares (page 4). That of course is not the only problem with the forms. In addition, part of page 1 with instructions is missing, also cut off are sections of pages 2 and 5. In short, the application forms included reflects a level of sloppiness in its execution and does not reflect well on those responsible for the job.
It unclear how the company and the JCSD will deal with the matter, but it appears that the proper way would be the sending of the corrected forms to shareholders and extend the deadline date.
The capital market needs to clean up its act if it is not loose credibility.

Barita shareholders to vote on rights

Barita climbs to a new closing high of $50 on Friday.

Barita Investments (BIL) has advised that the Board of Directorshas taken the decision to withdraw its Notice of a Rights Issue to BIL’s shareholders, dated December 14, 2018 and instead hold a meeting of shareholders to consider the matter.
As a result an Extraordinary General Meeting of shareholders will be on Thursday, January 17, 2019, at the Terra Nova Hotel, at 10 am to consider the issue of increasing the issued shares by way of a rights issue.
“The purpose of the meeting is to ensure that BIL’s minority shareholders will have an opportunity to contribute to the decision for a Rights Issue,” the directors stated in their release to the Jamaica Stock Exchange.
The resolutions to be put to the extraordinary general meeting, include one for the issue of 262.28 million shares, as a rights issue. Each shareholder will be entitled to 10 shares for each 17 held, at the record date. The price for each share of the rights, is expected to remain at $15.50, as originally approved by the directors, unless varied at the upcoming meeting. The resolution is also asking that the terms of the issue are to be determined by the directors.
The rights in the original directors release were to be non-renounceable, if this condition remains after the vote at the meeting, it will mean that shareholders will not be able to sell their rights to a third party, as such if they decide not to take them up they will not be able to benefit directly from the issue.
The directors had previously voted to offer the rights to shareholders without calling a general meeting but after consultations, decided to put the matter to a general meeting of shareholders where it properly belongs.
Since announcing the rights in early December, the stock price has risen more than 56 percent to $50 and is up 567 percent for 2018 to be the stock exchange’s best performing stock.

Rita’s 14% of Barita value exceeds 62%

Rita Humphries-Lewin and husband Carl.

Rita Humphries-Lewin sold 81.56 percent of her shares in Barita Investments and collected $2.64 billion for it, but the amount she retained is now valued more than the amount sold in August this year, to Conerstone Investments Holdings.
Up to early part of August, Humphries-Lewin owned 339,975,664 in Barita Investments or 76.25 percent of the total issued shares. At the takeover price of $9.20 that was valued at $3.13 billion. She retained 62.7 million shares representing 14.06 percent of the issued shares, now valued by the market at $2.92 billion.
With the price of the stock reaching $46.50 on Monday, the vastly reduced ownership is worth almost what the full 76 percent holding in the company was priced at, based on the acquisition price, when Conerstone acquired 75 percent of the company.
Humphries-Lewin would have collected from the shares she sold but the amount she retained
On the other hand,Cornerstone paid $3.07 billion for 75 percent of Barita but based on the latest price for the stock the block is now valued at $15.5 billion representing a huge gain of $12.4 billion in a matter of 4 months.
The new majority owners have big plans for the company that could well push the valued much higher in the not too distant future.

Barita defies broker’s sell recommendation

Barita climbs to a new closing high of $46.50 on Monday.

Barita Investments closed at $46.50 on Monday with a gain of 450 percent for the year so far, to be the best performer of any stock listed on the Jamaica Stock Exchange. Since late 2016, the stock gained 1,400 percent.
In late 2016, a leading brokerage house concluded their assessment of Barita Investments as follows, “we expect just a marginal increase in year on year net profit. Given this expectation, we estimate BIL shares to be valued at approximately $2.35 by applying the market average P/E to estimated EPS. Therefore at a current market price of $3.10, we are recommending a SELL on BIL.” Interestingly, while they recommended a sale, IC placed a BUY RATING on it and it occupied the number 2 spot on the main market BUY RATED list. That is a huge contrast.
That year, while reported profit was down to $207 million from $242 million, in 2015 total comprehensive income, the better measure of profitability was $691 million or $1.55 per share, compared to $201 million, a huge increase. In 2017, traditional profit slipped to $172 million after an impairment on investments charge of $81 million, total comprehensive income ended at $492 or $1.10 per share. For 2018, reported profit jumped to $374 million and total comprehensive income moved to $736 million or $1.65 per share.
Investors who sold their stock in 2016 lost out big time. Information gleaned by IC is that the gains experienced in 2018, may not be over. The company may have pocketed around $100 million from the placement of a US$10 million bond issue recently, both the company’s equity portfolio and the equity-linked Unit Trust would have benefitted from the rise in local stock prices and resulted in increased profits for the December quarter. Then there are other fees that should have increased that will add to the profit for the quarter and for the fiscal year. Importantly, unlike in the past, when unrealized gains on securities was treated as other comprehensive income from the current year, all

Barita Investments 2017 AGM held on March 23, 2017

gains or losses will be treated as a part of regular profit and that is likely to make a big difference in how investors value the company.
The new majority owners, in the eyes of investors have brought new life to the company. At least, that is what from the meteoric rise in the stock price is saying. The company is to raise over $4 billion by way of a rights issue at a price of $15.50 each. The directors have not yet stated publicly, what the funds from the rights issue, will be used. There is talk that some of it will be invested in an expanded portfolio of equities, to take advantage of what is being seen as an improving Jamaican economy that should lead to a rise in stock prices and a role out of services to the wider Caribbean region.
Apart from the company’s stock that seems set to be 2018 number one performer, the equity linked units trust is the best performing for 2018 and seems set to cop the number one spot for the year. Their other funds have trailed the rest of the market by a mile, with the real estate and FX Growth funds down more than 20 percent.

NCB to go for 62% of Guardian

NCB Financial Group is to go after 62% of Guardian Holdings.

NCB Financial is to make a revised offer to acquire 62 percent of the Trinidad based Guardian Holdings (GHL), at a revised price of US$2.79, the group said today, in a release.
This is in line with the original offer made in 2017 but at higher price and above the 51.85 percent at US$2.65 they agreed to, after being investigated by the Trinidad Exchange Commission. The revised offer which will be published soon, with the exact timing is yet to be determined. The acquisition is to be partially funded by US$45 million to be provided by way of vendors’ loan from selected shareholders.
The acquisition is set to make a major impact on the NCB Group and ultimately the stock price. For one GHL is being bought for just less than 10 times earnings while NCB is selling at 15 times 2018 earnings as such the impact on the price of NCB shares will be seen in 2019 as GHL profit will be

Guardian Holding

valued more to NCB shareholders. Most importantly, majority ownership will permit it to reshape the group by merging the separate insurance companies and securities operations into one and allow it to rationalize various back office operations within the group into one unit and thus cut considerable cost out of the enlarge group.
NCB already owns 29.99 percent of Guardian. The GHL shares last traded in Trinidad at TT$16.95 or approximately US$2.53. NCB closed trading on the Jamaica Stock Exchange at $148.

Barita proposes $15.50 rights issue

The directors of Barita Investments on December 13, passed a resolution for a Rights Issue of 10 shares for each 17 owned at the record date, to take effect in early January which if taken fully will results in 258 million new shares and bring the capital issued to 707 million units.
The board resolution states:- The Board approves the issue of 258,064,516 ordinary shares (in this resolution “New Ordinary Shares”) part of the authorised capital, the same to be offered to the holders of Ordinary Stock Units by way of a Non-Renounceable Rights Issue on the following terms:
(i) Offer Price of J$15.50 per New Ordinary Share. (ii) Offer to Stockholders of the Company as at a Record Date of December 31, 2018. (iii) Offer to Open on January 8, 2019
(iv) Last date for splitting to be January 15, 2019. (v) Offer to Close on January 22, 2019 for acceptance by Existing Ordinary Stockholders/Renouncees
(vi) Offer to Close on January 25, 2019 for acceptance by applicants for Excess Shares (not taken up by Allottees under the Letter of Provisional Allotment).
2. The Directors are hereby authorized to dispose of all such New Ordinary Shares not taken up by Allottees on terms and conditions as the Directors may consider expedient in their absolute discretion, in consultation with the Arranger for the Rights Issue, Sagicor Investments. BIL further advised that the share ratio allocation for the Rights Issue will be as follows: Ten (10) additional shares for every seventeen (17) shares owned by existing stockholders of Ordinary Shares in Barita Investments.
Apart from a rights issue, the above resolution speaks to the last date for splitting being January 15, which raises the question if a stock is to be considered as well.
Barita stocks that trades on the Jamaica Stock exchange at $33.45 on Friday and is up 346 percent for the year to date.

Barita directors to consider rights issue

Barita Investments advised the Jamaica Stock Exchange that a meeting of the Board of Directors will be held on December 13, 2018, at which the consideration of rights issue of the ordinary shares of the company is being considered.
IC, has been reliably informed that a large portion of the recent $5 billion bond issue that was raised by Conerstone Investments Holdings the new majority Barita Investment shareholder is earmarked for the rights issue.
The company will need to call an extraordinary meeting of shareholders to get shareholders approval for the rights, it is therefore unlikely that if approved by the directors it will take effect until late January 2019 at best.