Peart clarifies Lasco IPO
Published:Wednesday | August 4, 2010 | 12:00 AM
Lasco has reshaped its operation ahead of going public, a plan, it now emerges, that has seen a group of eight affiliated limited liability companies being restructured down to four, three of which are being offered separately to stock market investors ahead of their listing on the JSE Junior Stock Exchange.
Gary Peart, chief executive officer of Mayberry Investments Limited, the lead arranger of the junior market float, said Tuesday that it was a misperception that Lasco was being floated as a group operation. What is being arranged, he said, are three separate initial public offerings.
Each IPO is likely to be priced within the J$2 to J$3.50 range per share, and are aimed at raising a combined J$380 million to J$470 million in equity capital, according to documentation obtained by Wednesday Business that formed the basis of presentations made to a group of potential investors last week.
Of the three companies being taken public, Lasco Distributors Limited is seeking equity of J$150 million to J$190 million; Lasco Manufacturing Limited is going after J$180 million to J$230 million and Lasco Financial Services is going after J$50 million to J$70 million, according to documentation obtained by Wednesday Business.
The group has 866.5 million shares outstanding, has a price to book value of 1.16, a debt equity ratio of 0.61 and had a return on equity of 20 per cent, according to the presentation documents.
Peart also told Wednesday Business that the implications of the legal fight that Lasco group principal Lascelles Chin is having with his former wife, Audrey Chin, is another misperception clouding the offer.
That case, he says, involves just one of the eight companies, Lasco Foods, which was subsequently acquired by Lasco Food Successors and is now merged under Lasco Manufacturing.
Case settled for $200M
Lascelles, he said, has settled the case for about J$200 million, but is still negotiating with Audrey over interest payments, which could amount to another J$100 million. That bill, Peart said, is a liability on Lascelles Chin, and not the company.
Audrey Chin still has ownership in one of the companies being taken public, Lasco Distributors, but it is a minor 0.3 per cent share, the Mayberry CEO told Wednesday Business.
Lasco group is a J$6.2 billion operation by revenue. In its last financial year ending March 31, 2010, the group made J$200 million of net profit.
And while the company's products have a presence in 18 countries outside Jamaica, its international sales from Lasco Manufac-turing are a minor nine per cent.
The group currently operates from two main bases — White Marl in St Catherine and Red Hills Road in Kingston.
"The company has a strong brand equity in Jamaica and the wider diaspora with a well diversified line of products and pharmaceuticals," Mayberry Investment told prospective investors last week.
According to Mayberry, "The relatively large size of the issue and low nominal value of shares will increase the prospects of post listing liquidity."
Lasco Remittance, Lasco Financial Services and Lasco Properties have been amalgamated to form Lasco Financial Services, while Lasco Foods and Lasco Food Successors have been formed into Lasco Manufacturing.
The third company that is intended to be listed on the exchange is Lasco Distributors excluding its Lasco Barbados operation, which remains a stand alone entity.
Peart who refused to disclose the price at which the shares will go on the market, but according to documents obtained by Wednesday Business, a range of $2 to $3.50 is being contemplated, but is still to be finalised.
On book, Lasco, a local company founded by Lascelles Chin in 1988 has shares outstand-ing totalled approximately 866,504,152. A year after the company was formed in 1989, Chin established an office in Barbados to distribute Lasco food products in the region. Since then, the company has been aggressively expanding its product range and operations.
In 1990, Lasco began exporting manufactured goods and is in markets spread across the Caribbean, United States and United Kingdom.
Lasco Manufacturing sales are now at J$2.6 billion with exports, accounting for nine per cent.
Lasco Distributor offers over 250 consumer products, has an estimated market share of 73 per cent in fortified drinks which comprise Lasco food drink and Lasoy. For whole milk powder Lasco also claims a 85 per cent market share while it has 29 per cent of the infant formula market.
Lasco Financial Services encompass cambio services, money transfer and property services. Presently it has 28 per cent of the cambio market.
"Lasco will be further maximising the opportunities presented in Jamaica, the region and the world for rapid, sustained expansion," Lascelles Chin said at the investors' briefing.
"The money raised from the public share offer will boost the expansion thrust."