FosRich executing a 10-to-1 stock split
FOSRICH Company Limited will seek permission from its shareholders on June 21 to split the company’s stock 10 to 1 and permit it to issue up to 126,000,000 shares in a rights issue or additional public offering (APO).
On that date FosRich will hold its annual general meeting (AGM) where it will have several special resolutions on the agenda. The stock split would result in the issued ordinary shares moving from 502,275,555 shares to 5,022,755,550 shares at the close of business on July 6. This would be effected by an increase in the authorised share capital from 512,821,000 shares to 15 billion shares through the creation of an additional 14.49 billion shares. FosRich kept its prior AGMs in August.
When the Jamaica Observer reached out to co-founder and managing director of FosRich Cecil Foster recently, he indicated that the company had opportunities that it didn’t want to miss and was planning to raise additional equity capital to take advantage of those opportunites. He, however, said that the company would only increase the share capital to the maximum $500 million for companies listed on the Junior Market of the Jamaica Stock Exchange (JSE). Foster’s comment was made before the board meeting last Thursday at which the stock split and rights issue/APO were voted on.
FosRich’s issued share capital stood at $369.62 million excluding treasury shares, which means the company has space to raise an additional $130.38 million. The AGM notice did not specify if the 126 million shares to be issued would be affected by the stock split. If the shares aren’t affected and the company maintains its aim to stay under the $500-million threshold, the company’s potential raise would be done at a possible price of $1.03 and be only 2.51 per cent of the company’s post-split outstanding shares with an expected rights issue. If the shares to be issued are affected by the split then the company would be able to issue 1.26 billion new ordinary shares which could possibly be indicative of an APO. Cecil and his wife Marion Foster control 80 per cent of the company; FosRich owns 2,210,244 of its own shares. The top ten shareholders own 92.4 per cent of the company or 463,893,175 shares.
The other special business items include the board or a duly appointed committee to determine the terms and conditions relating to the capital raise, and the conversion of those newly issued shares to be converted into stock units. The last item on the agenda is amendments to the company’s articles of incorporation surrounding virtual and hybrid AGMs. The meeting will be held over the Zoom platform.
A stock split reduces the company’s nominal price but increases the number of shares owned by the split factor. If someone owned 10,000 shares of FosRich at the closing price of $28.22 on Friday, that person would then own 100,000 shares at $2.82 after the split. FosRich’s stock price has increased by 212 per cent year to date and is the second best-performing stock for 2022 excluding initial public offerings, with market capitalisation of $14.17 billion. It was the best-performing Junior Market stock in 2021 as it rose by 120 per cent.
Fifteen other Junior Market companies have split their stock since listing on the JSE. The last Junior Market company to split its stock was Jamaican Teas Limited which had a three-to-one split in November 2020. Massy Holdings Limited, which cross-listed in January, had a 20-to-1 stock split on March 11. This reduced its stock price from $1,952.58 to $97.63. Several companies have split their stock over the last six years including the JSE, Carreras, Caribbean Flavours and Fragrances, Salada Foods Jamaica and Pulse Investments. The splits resulted in greater trading in all the companies listed above as there were more nominal shares that could be traded.
