Derrimon Trading goes for $200m

Recently listed Derrimon Trading Company goes the capital market to raise up to J$200,000,000 from an 18 months Secured Commercial Paper with a minimum denominations of J$1,000,000.00 and increments of $100,000 at a fixed rate of 12.25 percent per annum. Interest is payable monthly, which raises the effective rate beyond that stated. The net proceeds from the issue will be used for working capital and general corporate purposes the term sheet states.

The issue date is February 6, 2014 and Maturity is August 6, 2015. Withholding tax shall apply to Note holders in accordance with applicable laws. Mayberry Investments are the brokers for the issue.

Derrimon Trading went public last year December and raised $102.5 million in fresh capital in an IPO offering for working capital, expansion and cost of the IPO estimated not to exceed $9.5 million, the prospectus stated.

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

The problem here is that if they succeed with the current issue which involves expensive money, borrowings will exceed equity capital. Borrowed debt should not be more than 50 percent of equity capital, the accepted norm.

The last balance sheet. disclosed at the time of the IPO, showed a company with adequate working capital, requiring more equity injection than the IPO brought in to align the current asset ratio in line with the accepted norm of $2 of current assets versus $1 of current liabilities. Instead, what existed then was $1.15 to $1 and even with the infusion of funds from the IPO, it would have gone to a still inadequate $1.33 to $1.

Related posts |  Derrimon Trading, high risk low returns | Derrimon not over by much

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  1. […] rose 6 cents to end at $3.96 with 196,769 shares changing hands at a new 52 weeks’ high and Derrimon Trading preference share ended with 400 shares changing hands at […]

  2. […] to $1.40, Paramount Trading ended with just 2,543 units changing hands to gain 15 cents to $3.95, Derrimon Trading 11.75% preference share saw trading in just 900 units with a 25 cents gain to $2.50 and Eppley 9.5% […]

  3. […] 7 securities that had no stocks being offered for sale. Stocks trading in the junior market are, Derrimon Trading ending with 16,550 units trading and fell by 1 cent to $2.04, Caribbean Producers closed with 585 […]

  4. […] each, were executed through the Jamaica Stock Exchange on August 5, to effect the transfer to Derrimon for J$121,167,244, at $2.75 per share. Mayberry Investments acted as the investment banker to the […]

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