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Derrimon seeks J$4B in APO, gets greenlight to remain on Junior Market

With the prospect that its new additional public offer of ordinary shares might increase its share capital beyond levels permitted for the Junior Market of the Jamaica Stock Exchange, Derrimon Trading Company Limited has made a pre-emptive strike, seeking and obtaining permission to remain in situ even while paying main market fees.

Chairman and CEO of Derrimon Traders Derrick Cotterel (Photo: Jamaica Observer)

The company on December 15, 2020 issued a prospectus inviting the public to subscribe to an offer of 1,498,698,931 new ordinary shares, which may be upsized by no more than 301,301,069 additional new ordinary shares.

Derrimon is a food and consumer goods trader is listed on the Junior Market of the Jamaica Stock Exchange. It also has two subsidiaries: Caribbean Flavors Limited and Woodcats International Limited.

Directors noted that if this invitation is successful as well as its application for admission for trading of the New Ordinary Shares to the JSE, its subscribed participating voting capital will exceed the maximum of J$500,000,000.00 set by the Junior Market Rules.

Derrimon is seeking to raise up to $4,2 billion in its additional public offer.

The company has therefore written to the JSE indicating intent to seek its consent to remain listed on the Junior Market while paying the fees applicable to a Main Market company.

It was noted that the JSE has indicated by a letter dated December 2, 2020 that it has no objection to the request.

The offer of new ordinary shares will open on January 6, 2021 and is expected to close on at 4:30 p.m. on January 26, 2021, but this subject to early closure if the issue is fully sold and subscribed;

The target raised may increase. Directors noted in the prospectus that, if this invitation is fully subscribed, the gross proceeds will be approximately J$3.50 billion of which approximately J$205.25 million is expected to be used to pay transaction costs.

It was stated, “If the option to upsize is fully exercised the gross proceeds will further increase. The maximum by which the gross proceeds may increase by way of exercise of the option to upsize is J$723.12 million for a total gross proceeds sum of J$4.22 billion.

The subscription price is J$ 2.20 for existing shareholders or Derrimon Team Members; J$ 2.40 for Key Investors, Lead Broker’s Clients, and Non-Reserved Applicants (General Public).

The company indicates that proceeds of the APO will be used for two  main purposes. The first is to facilitate growth and the second is to reduce indebtedness.

In respect of growth, it was stated that the company has identified two potential acquisitions in the United States of America.

Derrimon will also use the proceeds to facilitate the build out of its newest location at Millennium Mall, Curatoe Hill in Clarendon. The Company will also use the proceeds to repay existing indebtedness.

The Derrimon Group’s Gross Profit for the 2019 financial year was J$2.28 billion, which is an increase of approximately 34.76 per cent over the previous year.