Kingsley Cooper, chairman and CEO of Pulse Investments, is seeking a minimum of $95m from a rights issue. - File

In a hunt for equity capital to drive expansion plans, modelling agency Pulse Investments Limited will, on May 16, offer some 18.12 million ordinary shares to existing shareholders under a non-renounceable rights issue.

The issue, which is priced at $7 per share or $1 discount on the existing price on the Jamaica Stock Exchange (JSE), is expected to earn $126.8 million at full take-up.

It closes May 26 but chief executive officer Kingsley Cooper has left open the possibility of the offer being extended.

"To be successful, the company must raise at least 75 per cent of its target, or about $95 million," said Cooper who owns about 77 per cent of the modelling agency. "Shareholders may apply for shares in excess of their rights."

Newly issued shares

Rights are being allotted on the basis of one ordinary share for every 14 shares held.

"The offer is not underwritten," said Cooper, who is also the company's chairman. Other directors are Jeffrey Cobham, Oliver Holmes, Hilary Phillips, Lois Lake-Sherwood and Eleanor Brown.

The newly issued shares will rank pari passu or equally with the existing ordinary stock units, and an application will be made for them to be listed on the JSE.

Pulse, which relisted its 253,670,362 shares on the JSE in 2006 after a period of reorganisation, which included injection of fresh cash from government backers, has returned to profitability and is looking to grow.

In its last financial year ended June 2007, the company made $266 million to more than double its 2006 net income, while its six-month results in the current period has already returned net profit of $222 million or an average of $111 million per quarter.

Cooper's business is built around what he calls 'sponsorships' or yearly commitments by companies to associate their names or brands with Pulse events.

Pulse's revenue spinners - turnover topped $788 million last year - are cash sponsorships and advertising entitlements from five shows packaged for television, Caribbean Fashion Week and other events, Caribbean Model Search, commissions, and its calendar and other publications.

Original deal

The rights issue, open to share-holders on record on May 5, follows Cooper's early redemption of the 8.9 million preference shares held by the Development Bank of Jamaica (DBJ) against the funds injected by the state agency in Pulse that gave it a six per cent stake.

The original deal was with National Investment Bank of Jamaica which has since merged with DBJ.

Cooper, this week, is expected to pay the final $2.2 million of $28.8 million to DBJ to free his company two years early of that obligation.

His expansion projects include building out Villa Ronai into a 35-room destination spa, branded merchandise and packaged tours to Pulse events.

International expansion

"Funds raised will be used to drive the company's international expansion, further develop Villa Ronai, fund other capital projects, finance its new interactive websites and generally enhance new technologies within the company, as well as augment the company's working capital," said Cooper.

The company is capitalised at $1.15 billion, with retained earnings of $753 million; and has long-term loans of $22 million plus short-term liabilities of $41 million, according to its unaudited balance sheet for December.

Financial advisor to the rights issue is Capital Options Limited, Barita Investments is lead stock-broker), Grant Stewart Phillips & Co, the attorneys, KPMG, the registrar and transfer agents.

business@gleanerjm.com