AMG launches J$58m IPO
Published:Wednesday | June 22, 2011 | 12:00 AM
Local box manufacturing company AMG Packaging and Paper Company Limited is to go public with an initial offering of shares priced to raise J$57.8 million.
The company will make 21.5 million shares available, of which 14.4 million or 67 per cent will be offered for general subscription at a price of J$2.88, while 7.1 million shares are reserved for affiliates of the company at a discounted J$2.30 per unit.
Subscriptions open in one week.
A fairly young company, formed just six years ago in September 2005 by businessmen and chairman Mark Chin, along with his brother and non-executive director Paul Chin, and George Hugh, AMG Packaging currently produces eight million units of boxes and is projected to reach some 16 million by the end of this year.
"We are on track to expand and double our volumes," said Michael Chin, general manager of AMG Packaging at the company's investor briefing Tuesday in Kingston to announce the IPO.
"We are still growing and there is significant potential," he said.
There is a large market to be captured, he said, though he could not quantify it, but said many companies were still importing packaging.
The proceeds from the IPO will be invested in additional storage space, new machinery and improvement of some equipment, and broadening AMG's product mix.
Turnover tripled
In five years, AMG's turnover has almost tripled, from J$82 million to J$232 million in 2010. Pre-tax profit also grew at an average annual rate of 26 per cent from J$14 million to J$32 million over the same period.
The box maker is now valued at J$123 million by assets, double its 2006 position; its equity bases has grown six-fold to J$62 million over the same period, and the company is debt free, according to its prospectus released Tuesday.
Initially, AMG produced only corrugated cardboard boxes from leased premises in the Kingston Free Zone, with 12 employees, inclusive of a general manager, two supervisors, and nine machine operators.
In September 2006, AMG purchased a 15,000 square foot premises at 10 Retirement Crescent and expanded its manufacturing operation.
Today, it operates a production line for three-layer corrugated cardboard, cutting and creasing machines, paper die cutters, gluing, slotting, and strapping machines for colour printing of customer product logos on the packages.
The machinery and equipment were last valued in excess of J$20 million in February 2011.
The company has grown its staff complement to 63 persons from 12 now operating a two-shift system and has a client base of 350.
AMG initial public offer will open to the market on Wednesday June 29 and close a week later on July 6.
Stocks and Securities Limited is the lead arranger of the offer.
The company plans to list on the JSE Junior Exchange.