JP to increase investment in Kingston Wharves
Published:Wednesday | January 25, 2012 | 12:00 AM
McPherse Thompson, Assistant Editor - Business
Local conglomerate Jamaica Producers Group Limited is seeking to invest more than J$1.7 billion to acquire 25 per cent of port company Kingston Wharves Limited.
The Kingston Wharves board has given the all-clear to the proposed investment, but it is subject to approval by shareholders.
Jamaica Producers is seeking to acquire 357,550,000 of the ordinary shares, priced at J$5 each. The deal calls for the company to issue new shares, and is expected to dilute the holdings of the current owners, which already includes JPG.
The conglomerate already holds at least 6.6 million shares or 0.62 per cent of the port company, making it a top-10 owner.
"It is projected that the proportionate reduction in shareholding percentage by each shareholder to allow the JP 25 per cent subscription will be more than compensated for by the increase in value and benefits that will result from the JP investment," the market filing said.
National Commercial Bank currently owns the largest block of shares, 360.8 million units or 33.64 per cent at last disclosure; Kingston Port Workers holds 169.13 million shares or 15.77 per cent, and Shipping Association of Jamaica 168.99 million share or 15.75 per cent.
Professional advice
On Friday, when the deal was first disclosed, the stock traded at J$5.15 per share. It spiked to J$5.80 on the Jamaica Stock Exchange on Tuesday. Kingston Wharves said the board has received professional advice with respect to the subscription price.
JPG has confirmed that that it may seek to acquire additional shares from third parties and/or sell shares from time to time, but it has no interest in acquiring a majority or controlling interest in Kingston Wharves, or holding less than 21 per cent of the shares, according to a joint disclosure to the JSE last Friday.
A term of the proposed transaction is that Kingston Wharves' articles of incorporation be amended to allow minority shareholders holding 21 per cent or more of the issued shares the right to appoint up to three directors, the statement said.
The current articles allow a 51 per cent shareholding vote to elect the directors. The amendment is being sought "to strengthen the rights of minority shareholders and allow for best practices in corporate governance", the companies said.
Kingston Wharves said it would provide full details on the proposed transaction to guide shareholders in making a decision.
The statement quoted chief executive officer and interim chairman of Kingston Wharves, Grantley Stephenson, and managing director of the Jamaica Producers, Jeffrey Hall, as saying that the proposed investment would provide the terminal operator with secure long-term financing for port expansion and development. It would also allow Kingston Wharves to benefit from Jamaica Producers' participation and experience in shipping services and in the productive sector generally in Jamaica and overseas.
"We believe we can work closely with Kingston Wharves and, by making this investment, support their objective of having the port infrastructure improved and ready to take advantage of the opportunities that will arrive with the expansion of the Panama Canal," Hall told Wednesday Business on Tuesday.
Shipping history
Jamaica Producers, which is also listed on the JSE, has a long history in shipping and terminal operations and is a founding shareholder of Kingston Wharves, which was launched in 1945.
It also has extensive experience operating internationally under structured arrangements with leading multinationals demanding high service levels and requiring major capital investment programmes.
"JP, therefore, combines an appreciation of the capital requirements of port development with an appreciation of the importance of high-quality service and cost containment," the release said.
It said Jamaica Producers has adequate financial resources to complete the transaction without recourse to financing arrangements that may be adversely affected by short-term movements in foreign exchange and interest rates.
The conglomerate last year liquidated some of its equity holdings and said it was positioning to invest in new areas. Since then, it has partnered with Pan Jamaican to buy the Mavis Bank Coffee Factory assets, and acquired majority interest in Tortuga International Holdings.