HONEY Bun Limited is making available up to 18,750,000 ordinary shares at the invitation price of $3 per share with the aim of raising $50.8 million dollars and a listing on the Junior Market of the Jamaica Stock Exchange (JSE).
This offer represents 19 per cent of the authorised share capital of 97,500,000 shares of the company and will open at 9:00 am on Wednesday, May 11, 2011 and close at 4:30 pm on Wednesday, May 18, 2011. The issue may close at any time after the opening date and time, once it is fully subscribed.
The prospectus reveals that Honey Bun has reserved a total of 9,375,000 shares for company applicants and key partners, such as non-executive directors, senior managers, employees and contracted staff of the company. The first 200,000 of those shares will be reserved at a discounted price of $1 each and available in blocks of $200 per block with a limit of one block per applicant.
Another 8,437,500 shares are available at a discounted price of $2.40 each and available on the basis of seniority. The remaining 737,500 shares available for this group are available for ‘key distributors of the company’ at the invitation price of $3 each. The public will subscribe to the other 9,375,000 shares at a price of $3 each.
Michelle Chong, CEO of the company which has been family-owned for 29 years, said the IPO would provide Honey Bun with the appropriate type and level of financing to pursue its expansion plans. Currently only one per cent of revenue is earned from exports and plans are to expand further into international markets including the United States, United Kingdom and across the Caribbean.
Honey Bun is also targeting a greater share of the local market, for which it now controls up to 38 per cent of the market for individual packaged baked products, and is the number one among the youth market for persons up to 40-years-old.
Last year, Honey Bun made profits of $17.19 million according to its audited financial statements for end September 2010. Profit before tax was 25.8 million for the period. However, if the company is successful in its bid to become a listed company on the Junior Market, it will receive a 10-year tax break, the first five of which will be 100 per cent free of corporate taxes. The company employs 112 full-time employees and 78 contract workers as at September 30, 2010.
Mayberry Investments Limited (MIL), which has listed seven of the eight companies so far on the JSE, is the lead broker of the IPO.
“If we go by how successful the other listings have been, then we can expect that this one will be just as, if not more, successful,” Gary Peart, CEO, MIL said last month ahead of the offer.