COK seeks J$300m of equity through deferred share offer

COK Sodality Co-operative Credit Union will be selling J$300 million worth of shares to existing members to raise equity capital, which it will redeem in five years.

The J$1-per-share offer, brokered by Money Masters Limited, opens for subscription today, May 18, and closes July 18. Minimum purchase has been set at 50,000 units.

The shares will carry a coupon of 7.85 per cent for the first year of the issue, and pay monthly dividend thereafter at 150 basis points above the prevailing Treasury bill yield.

Repayment will be on May 18, 2016.

COK has structured the offer as a deferred share plan, which it has dubbed 'Wealth Supreme', suggesting that purchasers cannot redeem them before the due date unless they are giving up membership in the credit union.

Chief executive officer of COK Sodality, Jacqueline Mighty, said the money will boost the credit union's capital base as it positions to enter the mortgage market at midyear 2011, as well as strengthen the pool of funds available for lending under its micro-finance portfolio, now valued at J$20 million.

"The offer will strengthen the capital base of the credit union, enabling COK Sodality to continue its business-line diversification strategies and expansion into new markets, specifically the homeownership and business micro finance lines," said Mighty.

"The capital required for this strategic intent is a major reason COK Sodality has come to the market with this unique offer which is not subject to withholding taxes," she said at the launch in Kingston on Tuesday.

Claudette Crooks, director and president of Money Masters, said no tax will be taken at source and interest will be paid monthly. The offer is structured, she said, to benefit pensioners who need the cash flow.

First in, first out

Crooks also stated that shares will be allocated on a "first-in, first-out" basis, that the offer would close as soon as the subscriptions hit the J$300 million target.

The sum, she said, was the limit placed on the issue by Tax Administration and Audit Department - one of three agencies now merged to form Tax Administration Jamaica - which signed off on the withholding tax arrangement.

Crooks said COK, whose investment portfolio holds J$600 million in 30-day treasuries, was well positioned to redeem the shares when required.

The credit union said the offer is designed for individuals of medium to high net worth, with a propensity for long term savings.

COK Sodality said persons looking to join the credit union to access the offer are welcome to do so.

austanny@yahoo.com