UDC sells hotel shares for US$11.2m

The Urban Development Corporation (UDC) has concluded the sale of its 50% stake in Bloody Bay Hotel Development Limited (BBHDL) to Village Resorts Limited (VRL), which owned the other 50% of the company. VRL, in response to the UDC’s offer, had expressed its desire to exercise its pre-emptive right to acquire the UDC’s shares in BBHDL in June 2011. Cabinet approved the sale of the shares to VRL in January 2013 and the sale transaction was finalized in March with the signing of an agreement on 27 March 2013.

The gross transaction proceeds realized by the UDC was US$11.2M, which included US$9.5M for the real estate and related fixed assets, and US$1.7M representing UDC’s share of cash and other liquid assets of BBHDL at the date of the sale agreement.

BBHDL’s principal asset was Breezes Grand Resort & Spa, Negril, (formerly Grand Lido Negril) a 210 suite all-inclusive property located in Negril, Hanover.

NegrilBreezes150x150VRL secured an agreement to sell the hotel’s real property and other assets owned by BBHDL to BBNH Resorts Limited, which will further develop and expand the hotel utilizing lands acquired through the sale transaction. BBNH is an affiliate of Blue Diamond Hotels & Resorts Inc. The expansion will be in accordance with the UDC’s overall plans for the development of the area.

Blue Diamond’s portfolio of hotels also includes, in addition to Breezes Negril, the former 350-room Breezes Trelawny/Starfish Beach Hotel purchased in June 2012, which will re-open as Royalton White Sands in October 2013. With the acquisition of Breezes Negril now complete, Blue Diamond has rebranded the property as the Grand Lido Negril Resort & Spa. The same name was used by former owner SuperClubs when the company opened the resort in 1989 before rebranding it as a Breezes property in 2009.

“The Grand Lido brand has long been synonymous with top-quality accommodations, service, cuisine and beach settings. This is the first resort to be relaunched under our Grand Lido brand,” said Jordi Pelfort, managing director of Blue Diamond.

Blue Diamond is a division of the Toronto-based Sunwing Travel Group.

Cable & Wireless email moves to Google

Cable & Wireless (C&WJ) has announced that they are going to use Google to host cwjamaica.com email and portal services in the future. According to a message to their subscribers the company says “this is a very exciting change, as it will enable us to provide you with latest email technology through Google’s dynamic suite of communication applications.”

The company said that they expect the Google migration to be implemented within the next two months and that email addresses will not change and that the change will not impact virtual domain customers nor will it impact any aspect of their Internet connection.

“In preparation for this move, a change to your email password may be required. Once the mail services have been transitioned to Google, your email password will need to be at least eight characters. This change is necessary to be compatible with Google’s security requirements, if your password is already least eight characters, you will not need to make any change. If not, you will need to change the password before July 8th, 2013 to avoid any possible downtime during the move to Google.” the release from the company said.

The move is likely to make it easier for the company’s customers to send and receive emails, especially when overseas. Presently, when overseas, email access is through the company’s webmail service which is not user friendly.

Dividends & Insider Trades

Seprod Limited | Declared a dividend of $0.53 per share payable on July 8, 2013 to shareholders on record as at June 21, 2013. The ex-dividend date is June 19, 2013.The previous dividend paid by the company was $0.30 per share, on November 9, 2012.  Prior to this, the company paid a dividend of $0.53 per share on August 7, 2012.

Seprod reported profits for the first quarter of this year that was down on the similar quarter in 2012. Profit after tax profit slipped to $231 million compared to $292 million in the 2012 first quarter.

JPS Preference dividends | Declared quarterly dividends for the issued preference shares which will be paid on July 1, 2013 to shareholders on record as at June 14, 2013, the ex-dividend date is June 12, 2013. The following are the shares and the amounts:

  • Jamaica Public Service Company Limited 7% – $0.035
  • Jamaica Public Service Company Limited 5% C – $0.025
  • Jamaica Public Service Company Limited 5% D – $0.025
  • Jamaica Public Service Company Limited 6% – $0.03

Insider trades | Jamaica Producers Group Limited advised that two Directors purchased a total of 290,287 of the company’s shares, between May 17 & 24, 2013. Mayberry Investments Limited has also advised that a connected party purchased 29,037 shares in the company on June 3, 2013.

C&WJ announces $2.99 prepaid rate

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Following on the decision of the Office of Utilities Regulation to lower interconnection rates, from $5 to $1.10 effective July 1, Cable & Wireless (C&WJ), today announced a one rate of $2.99 per minute for all pre-paid calls to any domestic and select international numbers, effective midnight tonight.

The standard Talk EZ Prepaid customers will enjoy the $2.99 per minute rate – billed on a per second basis – for local calls as well as the USA, Canada and landlines in the U.K. The Talk EZ plan is the default option for all new LIME customers, existing subscribers may activate the plan by dialling *123*1# from any mobile phone.

Garfield Sinclair, CEO, Cable & Wireless Jamaica and Cayman revealed that the TALK EZ prepaid plan will also extend to calls made to subscribers on its rival competitors’ network, Digicel.

cable-and-wireless-worldwide280x150Coming down from $6.99 per minute – the new cross network rate of $2.99 represents a 60% reduction in the cost to call across networks for its mobile subscribers. Digicel customers currently pay up to $14.20 per minute to call the C&WJ network, the CEO said.

Sinclair further announced an offer for persons wishing to capitalize on the company’s new rate adjustment with an in-store deal that will see customers receiving a free Alcatel 296 handset and a free SIM card with the purchase of $1000 pre-paid mobile call credit. The two-day offer will be available at C&WJ stores island-wide from Friday, June 7 to Saturday, June 8.

C&WJ, which has emerged as the clear mobile value provider, announced a dramatic rate cut in on and off-network calls on June 14 last year, when the Office of Utility Regulation (OUR) issued its Interim Determination to reduce the Mobile Termination Rate from $9 to $5 per minute.

Jamaican Teas buys property

Jamaican Teas advised that they signed an agreement to purchase a property located at 2 Bell Road in Kingston. The property previously housed the operations of Beal Industries which manufactured Comet  Matches, which closed some time ago.

The property will be used to house the manufacturing operations of Jamaican Teas as the current facility rented at Norman Road in Kingston is inadequate to meet the company’s growth.

The property is approximately 1.5 Acres and the building is 17,000 square feet. The company expects to move in later this year after the necessary renovations are completed.

The acquisition will be funded by a combination of internally generated funds and external funding.

JPS to raise capital in Jamaica

Jamaica Public Service Company is to raise more long term capital on the local market. The proposal is to increase the share capital by the addition thereto of 3,500,000 Class “F” and 1,500,000 Class “G” Preference Shares. It is proposed to list the shares on the Jamaica Stock Exchange. Accordingly, a resolution to this effect is also to be considered by directors.

The company has called an extraordinary meeting to approve the issue of two new preference shares and for shareholders to give authority to the directors or a committee of the directors to determine the terms that the shares are to be issued at. The meeting will be held at the Head Offices of Limited, 6 Knutsford Boulevard, Kingston on June 5, 2013, at 10 am.

The resolutions to be considered by the meeting are as follows:

1. RESOLVED as an ordinary resolution that the authorized share capital of the Company comprised of:

– 30,315,733,190 ordinary stock units; and – 567,000 7% Cumulative Preference Shares “B” ; and – 66,500 5% Cumulative Preference Shares “C” ; and – 1,049,000 5% Cumulative Preference Shares “D” ; and – 514,000 6% Cumulative Preference shares “E” be and hereby is increased by the addition thereto of 3,500,000 Class “F” Preference Shares and 1,500,000 Class “G” Preference Shares so that the share capital of the Company will be comprised as follows:

– 30,315,733,190 ordinary stock units; and – 567,000 7% Cumulative Preference Shares “B” ; and – 66,500 5% Cumulative Preference Shares “C”; and – 1,049,000 5% Cumulative Preference Shares “D”; and

– 514,000 6% Cumulative Preference shares “E” ; and – 3,500,000 Cumulative Non-redeemable  preference Shares “F” – 1,500,000 Cumulative Redeemable Preference Shares “G”

JPS_logo150x1502. FURTHER RESOLVED as an ordinary resolution that the Company be authorized to issue and/or allot Cumulative Non-redeemable Preference Shares “F” and/or Cumulative Redeemable Preference Shares “G” with rights/restrictions as to Voting, Dividends and Winding up and/or otherwise as may be determined by the Directors of the Company or a Committee of the Directors appointed for such purpose, subject always to the Articles of Incorporation of the Company, and that the Directors of the Company or such Committee be and are hereby authorised to determine all such rights and restrictions and the Directors be and are hereby authorized to allot such Cumulative Non-redeemable Preference Shares “F” Cumulative Redeemable Preference Shares “G” at such subscription price per Preference Share “F” and Preference Share “G” as the Directors of the Company or such Committee may deem fit, the same to investors accepting an invitation to subscribe for such Preference Shares “F” by way of private placement(s) of such Preference Shares “F” and/or Preference Shares “G”, or otherwise and on terms and conditions determined by the Directors of the Company, subject always to the Articles of Incorporation of the Company.

JMMB to acquire 100% of IBL

Jamaica Money Market Brokers Limited (JMMB) has advised of its intention to acquire 100% of the shareholdings in Intercommercial Banking Group Limited (IBL Group). JMMB currently owns 50% of the shares of IBL Group which comprises Intercommercial Bank Limited and Intercommercial Trust and Merchant Bank Limited. The IBL Group is based in Trinidad and Tobago.

jmmb150x150Last year JMMB acquired all the shares of Capital & Credit Financial Group which increased the assets and profits of JMMB. The full acquisition of IBL was slated from as far back as 2012, when the selling shareholder indicated their desire to sell. This acquisition is in line with JMMB’s plans to be a dominant player in a number of the Caribbean countries. The group has acquired entities in the Dominican Republic and could well make further inroads there in the future. It is felt that there are many opportunities in that country for expansion by acquisition for the group.

JMMB is expected to report full year’s profit by the end of this month. At the end of December 2012, JMMB made a net profit of J$3.19 billion and earnings per share of J$1.95 for the nine month period ended 31 December 2012. The results include a one-off gain of J$1.61 billion from acquisition of Capital & Credit Financial Group. JMMB will likely be hit with a big charge for the debt swap of government bonds thus negating the gains made from the CCFG acquisition.

Caribbean Cream trading on Friday

Caribbean Cream will commence trading of Friday under the ticker symbol Kremi. This confirms IC Insider report last week that the listing was set for this week. The company is the latest to be listed on the Jamaica Stock Exchange.

Stock outlook | The company which went to the market in April to raise $75.7 million was just oversubscribed on May 1, well ahead of the closing date of May 10. Not much is expected in terms of price movements when trading starts since there was not the usual demand and heavy subscription for the shares as has been the norm for majority of the junior listing stocks.

More cash for Lascelles’ former owners

Some 985 former Lascelles deMercado shareholders are once more pretty happy as they received another distribution from their old company. The payout was made through New Transport Group, the company formed to take over the companies that Campari did not acquire when they took over Lascelles last year.

The amount being paid works out at $18.6533 per share of which $13.62 has been paid over, leaving $4.29 left to be paid later. No date was disclosed for when the balance is to be paid.

The former majority holders had arranged that amounts in excess of working capital needs would be paid over by Lascelles to the new company. This distribution is being made under that arrangement.

The directors of the new company indicate that they have engaged experts to advise on the future of the company and that shareholders would be updated at the annual general meeting later this year.

D&G or C&WJ: to buy or not?

Hi John: Should I buy more Lime stock or D&G? I already own some Lime shares. What was the last dividend paid by D&G? Thanks for your advice.

Response | That is a tough question. By the way there is no such company as Lime. Unfortunately the stock exchange has, in their wisdom, bastardized the system by trying to suggest that Cable & Wireless has had a name change but that is not so. There is no legal limited liability company such as Lime listed on the exchange.  Lime is purely a brand name and not the real company name. It seems to me that the exchange is totally confused. They have the name Lime for the company with the ordinary shares but they did not change the name of the preference shares which are still listed as Cable & Wireless. Drawing a line from what they have done, anyone not knowing the true situation would assume that there are two separate telecom companies listed, one called Lime and one called Cable & Wireless. Why JSE persists with this aberration is yet to be determined as there is no rationale for it, but then the stock exchange is doing many strange things these days. It makes one wonder if they are really serious about running a stock exchange at all.

D&G | Now to the question you asked. My investment company owns shares in both Cable & Wireless and D&G. First, the last dividend paid by D&G was 20 cents in December last year and another should be paid in June or July this year. They normally pay out 80% of profits each year so the next dividend could be around 40 cents since we project about 80-85 cents earnings per share for the current year to June.

DG_logo150X150D&G’s quarterly results are expected next week and they should  have enough momentum to surprise the market and push the stock price up. I really like it as they have cut a lot of costs out of the operation with the switch of production of Red Stripe to the USA. The local market seems to be holding up well based on the last set of results released. We see further demand in the next fiscal year that should continue to move the stock price higher.

C&WJ | We still like and have great hopes for Cable & Wireless. If fact, we love turnaround companies because if we get it right and time the entry into the stock, we will make above average returns. They have been cutting costs and revenues should start rising from the new pricing strategy adopted for cell calls last year. These moves allowed them to pull in more than 250,000 new users. The revenue from those phones should be earned for the full 12 months this fiscal year instead of only part year as was the case for the 2013 fiscal. The calculations we’ve made indicate strong profits this year from increased revenues and reduced costs, the latter based on cost cutting as well as improved margins resulting from re-pricing when the interconnection rate were lowered last year.

cable&wireless280x150Our main concern in the short term is the redundancy charge that we estimate to be around $3 billion that could cause the market to react negatively when the final 2013 numbers are released in a few weeks’ time. That doesn’t really bother us, as that reaction in our estimation, will be short-lived as investors start to see major improvement in the operating results starting in the June quarter. One may want to hedge one’s bet, by buying more now but leave room to pick up some at lower prices should the market react negatively to the impact of the redundancy cost that will depress the results but won’t repeat in the new year. Not only will it not repeat, there should be cost savings from the move that will help boost profits. Either way, it’s a bit of a gamble but the price is so low now and the upside potential so great in our estimation, that there is less risk in buying now than to await the results.