Jun 2010 Financial News

Tea offer opens at $3.37 per share

Jun 16, 2010

Jamaican Teas Limited, formerly Tetley Tea Company Jamaica Limited, is seeking J$98 million of equity capital when it open its offer of 29.4 million shares on Thursday, June 17.

In the prospectus posted last Thursday on the Jamaica Stock Exchange website, the tea manufacturer said 27,000,195 shares would be offered to the public at $3.37 per unit, while two million would be reserved for employees, senior managers and the newly appointed non-executive directors of the company at a discounted rate of $2.90. The other 435,500, also valued at J$3.37 per unit, has been reserved for lead broker and financial advisor Mayberry Investment Limited as part payment of professional fees.

The new capital is earmarked for expansion.

"The company intends to use the greater part of the proceeds of the invitation to increase its warehouse capabilities and fund increased overseas marketing activities in respect of the Tetley and Caribbean Dreams line of products," the prospectus stated.

It will also pay for the cost of arranging the offer, which Jamaican Teas said should not exceed J$5 million.

The family-owned tea manufacturer, run by John Mahfood, packages and distributes predominantly herbal teas under its proprietary Caribbean Dreams brand, as well as Tetley black and green teas and other teas for private customers under their own labels.

Mahfood and his father Adeeb each own 45 per cent of the company, while director Nancy Milne holds the other 10 per cent jointly with Mark Milne.

Following the public offer which closes in a week on June 24, the Mahfoods' share ownership will be diluted to 38.25 per cent each - or 76.5 per cent combined - and Nancy Milne to 5.96 per cent, with the remaining 17.54 per cent to be spread among minority investors if the offer is fully subscribed.

Jamaican Teas operates out of a 10,000 square foot complex on Norman Road in Kingston, which houses its plant, warehouse and administrative office. It also owns a 6,000 square foot warehouse on Harbour Street, and according to its prospectus, has plans to expand its warehouse facility by leasing an additional 3,000 square feet of space and purchasing additional packaging and other equipment, for an aggregate cost of approximately J$3 million.

Last year, the company reported sales of J$320 million, of which 38 per cent or J$121 million was from exports.

Jamaican Teas expects to pump J$10 million to J$15 million into marketing and advertising aimed at growing export sales, while retaining some J$17 million to J$22 million for future expansion.

The company plans to list on the nascent JSE Junior Stock Exchange within three to four weeks after the offer closes.


Source:
sabrina.gordon @gleanerjm.com
Jamaica Gleaner
Wednesday June 16, 2010

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