Lasco IPO to debut Sept 15
Published:Wednesday | September 8, 2010 | 12:00 AM
Lasco plans to invest J$300 million of the more than J$400 million equity capital that it hopes to raise from an offer shares in three companies, to expand its manufacturing arm at White Marl in St Catherine.
The company also plans to grow its financial arm through expansion into the Eastern Caribbean and Europe.
The initial offerings for Lasco Manufacturing Limited, Lasco Distributors Limited and Lasco Financial Services Limited - each structured as stand alone operations in preparation for going public - opens next week, September 15 at a price of J$2.50 per share for each of the three companies. Subscriptions close two weeks later on September 29, after which the shares are to be listed on the JSE Junior Exchange, growing the trading board to six companies.
The volume of shares on offer for public subscription in Lasco Manufacturing amounts to 48.95 million, with another 16.317 million secured for employees, and 16.317 million for other preferred parties, referred to as "key constituents" in the IPO prospectus.
Lasco Distributors will make 40.27 million shares available to the public, with another 13.42 million secured for employees, and 13.42 million for key constituents.
And Lasco Financial will offer 14.7 million shares to the public, while securing 4.9 million for employees and 4.9 million for constituents.
As part payment of its fees, Mayberry Investments Limited, the lead broker/arranger of the offer, has been granted options to subscribe to shares in the three operations - LML, 783,091; LDL, 643,889; and LFSL, 235,299 - which Mayberry can exercise anytime within a two year period from September 15 at the J$2.50 offer price, valuing the options at J$4.15 million.
The shares sequestered for employees are priced at J$1 to J$2 per unit, but those for key constituents will sell at the market price of J$2.50.
In total, Lasco plans to raise J$415.6 million from the IPOs.
A successful offer at 100 per cent take up will also dilute founder Lascelles Chin's more than 99 per cent holdings in each of the three companies to 79-80 per cent ownership of each business, as follows:
Lasco Manufacturing: 324.71m or 79.6 per cent of 407.93m of issued shares.
Lasco Distributors: 266.89m or 79.43 per cent of 335.999m of issued shares.
Lasco Financial: 98.05m or 79.99 per cent of 122.575m of issued shares.
Boost for white Marl property
Dr Eileen Chin, managing director of Lasco Manufacturing, said the plan was to further develop the 25-acre property at White Marl, St Catherine, where it has its distribution plant.
"We are going to move the manufacturing facility from here (27 Red Hills Road, St Andrew) to White Marl and that will give us the space for expansion," said Chin Monday during a media tour of the Red Hills Road operations.
Dr Chin said the expansion would help save the company millions of dollars.
"We are now operating manufacturing here in Red Hills and the distribution warehousing is in White Marl, so we had to be transporting raw material constantly from White Marl to Red Hills and finished goods from Red Hills to White Marl," she said.
"It is a whole day of transportation and it is costing us a lot of money."
The IPO funds will also finance expansion of manufactured product lines and acquisition of machinery for the plant, she said.
Lasco Manufacturing, formerly Lasco Food Successors Limited, produces a range of food items and beverages, and packages milk products. It is also responsible for the export distribution of the complete Lasco range of products.
The company, which earned J$197 million last year, up from J$171 million, exports to the Caribbean market, Europe and the United States, with its export revenue representing nine per cent of its total revenue.
Lasco Financial's managing director, Jacinth Hall-Tracy, said the company plans to export its business model in Jamaica into Barbados and the United Kingdom.
"As far as the Caribbean is concerned, in Barbados - we have already registered our company there - we have started to recruit agents to do Moneygram transactions, so that process is ongoing," she said.
The company is not as advanced on its UK plans but said contacts have been made and arrangements are being firmed up. Once done, Lasco Financial's next expansion target is south Florida, Hall-Tracey said.
Lasco Financial is a consolidation of the company's remittance, cambio, financial and property-services businesses.