Sep 2010 Financial News

JMMB seeks to triple preference share pool ahead of share issue

Sep 01, 2010

JAMAICA Money Market Brokers Limited's (JMMB's) shareholders will decide later this month if they will approve an additional three billion preference shares aimed at raising capital through the issue of a more "attractive" class of investment.

If approved, the pool of shares will be three times the size of the existing number of preference shares, which the firm plans to redeem between December and next February.

JMMB notified the Jamaica Stock Exchange (JSE) and shareholders of an addendum to the notice of the annual general meeting, scheduled for September 20 at the Jamaica Pegasus Hotel in Kingston, that will seek to add "the sum of $30,000,000 comprised of 3,000,000,000 fixed rate cumulative redeemable preference shares, the same to be issued and/or allotted with rights/restrictions as may be fixed by the directors of the company or a committee of directors of the company".

At the same time, JMMB notified the JSE of its intention to issue new preference shares next January to replace 855 million shares — worth $2.5 billion — that become due in December, when the firm plans to fully pay back for those shares.

The financial institution notified the Jamaica Stock Exchange (JSE) that "two classes of its preference shares, cumulative redeemable 12 per cent preference shares and cumulative redeemable 12.25 per cent preference shares, will become due on December 14, 2010 and will be paid out in full at that time".

The shares, which were issued in November 2007, are valued at $2.52 billion.

"JMMB intends to have a new preference share issue in January 2011 to satisfy client demands for low-risk investment opportunities with regular cash flows as well as deepen the institution's capital base, continuing the company's growth trajectory," the notification added.

As at June 30, 2010, JMMB had $7.3 billion in capital.

JMMB's group CFO Patrick Ellis told the Business Observer that the number of shares to be issued will be "based on market feedback and take-up," while the financial institution would be willing to issue all the shares should the demand be strong.

"Preference shares are very attractive because you get cash flow," Ellis said. "Also, the instrument is tradeable so investors can sell the shares if they want to come out of the investment."

Ellis said that, while the rate will be lower than the 12-12.25 per cent interest payable on the preference shares to be redeemed in December and February -- another 47 million shares valued at $142 million will be redeemed next February -- given that treasury bill rates are already as low as eight per cent, he assured that the rate would be competitive.

Changes made by the finance ministry last year, also applied tax on earnings from the asset class, but investors will be held responsible for paying over the tax.


Source:
Jamaica Observer
Wednesday September 1, 2010

http://www.jamaicaobserver.com/business/JMMB-seeks-to-triple-preference-share-pool-ahead-of-share-issue_7918972