Paramount eyeing new stock offering

PTL off Junior market listed Paramount Trading will be heading back to the stock market soon to raise additional capital to help fund the US$4-million 50/50 joint venture lubricant manufacturing operation being done jointly with overseas-based Allegheny Petroleum, IC Insider confirmed with Hugh Graham, Chief executive of the company.
At the end of August the company had cash and investments of $165 million well below the cash injection that would be needed for their share of the capital.
“The advisory team is currently working out the capital needs to determine the amount we will go to the market for,” Hugh Graham stated in an interview with IC Insider. Graham stated, “manufacturing the lubricants locally provides higher margins as value added will be better than with imports, will create a better future for the operation and will allow for export of the finished product.”
Graham could not give the start-up date for the venture which is to be housed on property owned by Paramount as they await various approval from governmental departments.
FuelIn response to the reason why the company pumped up the dividend to 39 cents to be paid in November from 15.1 cents in 2014, Graham said “the board considered the dividend payment versus the profit realised and felt that investors should get a good return on their investment.” According the Graham, “the payment is $60 million which still left $90 million to add to accumulated profit”
While there might be a lot of truth in that statement, the plan for a rights issue could not have escaped the board with the low price the stock has been trading.
The 2015 payment represents 41 percent of profit and equates to a dividend yield of 14.89 percent based on the price of $2.62 at the start of the year. For the quarter ending August earnings grew 27 percent to 28 cent per share versus 22 cents in the same period in 2014.

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