Another Paul Scott’s company is headed to the Junior Market and will bring the total companies listed to 9, these include Seprod, Caribbean Producers, General Accident, AS Brydens and Sons, Eppley, Epply Caribbean Property Fund, Productivity Business Solutions and Stanley Motta. Scott also has a significant interest in Lumber Depot and Transjamaican Highway in which Musson owns over 595 million shares and is the third largest shareholder.
Atlantic Hardware & Plumbing Company, a 30-year-old wholesale distribution company is offering 499,999,800 shares at $1 each for subscription. Just 200 million will be available to the public as JMMB Group is set to convert loans into shares. The shares are slated to be listed on the Junior Market of the Jamaica Stock Exchange. The company with a staff complement of 35 is located at 105-107 Marcus Garvey Drive. The issued share capital is currently 1.95 billion ordinary units. Construct Group owns 975 million units, Lumber Depot 682.5 million units and General Accident 292.5 million shares. The offer opens on the 27th of February and is scheduled to close on the 13th of March and will most likely close well ahead of the closing date, with only 100 million available for the general public.
The lead broker is JMMB Securities, an affiliate, the holder of a convertible bond, is entitled to exercise the conversion option for up to 300 million shares at $1 per share.
The net proceeds of $470 million will be used to repay debt, this includes the conversion of JMMB convertible bond representing 300 million units.
At the end of September last year borrowed funds surged to $1.34 billion compared to just $177 million at the end of 2023 as the company embarked on a share buyback, in a classic engineering exercise to get it to fit into the Junior Market capital size.
Revenues in 2023 amounted to $1.4 billion with a profit of $147 million before tax. Revenues declined from the 2021 and 2022 levels of $1.67 billion with profit before tax of $318 million and $290 million respectively. Revenues of $440 million were generated in the September quarter up 30 percent from $339 million in 2023 and for the nine months to September, revenues climbed by 12 percent to $1.23 billion from $1.1 billion in 2023. Profit for the quarter before taxation was $18.7 million versus $69 million and for the year to September 2024 – $84 million compared with $236 million in 2023.
In January, this year, Atlantic sold real property on Ashenheim Road in Kingston. The net sale proceeds will be used to repay approximately $230 million of existing indebtedness. Borrowed funds should fall to around $200 million from the combination of the IPO proceeds and internal funds. Accordingly, interest cost that was $48 million in the September quarter should drop around $20 million annually.
The PE ratio works out at 12.5 times earnings which is unlikely to move the stock much with the market average currently around 13 but there several that are trading above 15. This is not one those companies that has a great future ahead of it and most investors should look elsewhere for better prospects.