$1.1b worth of GK shares traded

Jamaica Gleaner - - BUSINESS - Steven Jack­son Se­nior Busi­ness Re­porter steven.jack­son@glean­erjm.com tameka.gor­don@glean­erjm.com

GRACEKENNEDY SHARES val­ued at more than $1.1 bil­lion traded on Fri­day, which rep­re­sented the big­gest day in years for the stock.

The trans­ac­tion comes just over a month into a three-way split of the stock to im­prove its liq­uid­ity.

Few share­hold­ers hold enough shares to trans­act vol­umes of 27.9 mil­lion units. The largest share­hold­ers of the food and fi­nan­cial ser­vices con­glom­er­ate com­prise a mix of in­sti­tu­tional in­vestors, in­clud­ing pen­sion funds, and in­di­vid­u­als.

Sources say that Sagi­cor In­vest­ments Ja­maica Lim­ited acted as the broker to the deal, but the buyer or buy­ers were un­known up to print. Nei­ther Sagi­cor nor GraceKennedy re­sponded to re­quests for com­ment.

GraceKennedy will pay a div­i­dend of 34 cents on Mon­day. The dis­tri­bu­tion — amount­ing to just un­der $9.5 mil­lion — will go to the for­mer owner or own­ers of the 27.9 mil­lion units as the trans­ac­tion oc­curred more than a week af­ter the ex-div­i­dend and record dates.

The GK stock gained 22 cents on Fri­day to close at $41.67. It traded at $42.49 on Tues­day af­ter shed­ding 47 cents of Mon­day’s gains. The con­glom­er­ate’s mar­ket cap­i­tal­i­sa­tion now stands at $42.3 bil­lion.

The last time in­vestors trans­acted even a third of Fri­day’s 27.9 mil­lion vol­ume was back in Novem­ber 2014 when roughly 9.5 mil­lion units traded at $60 per share.

In Au­gust, the com­pany ef­fected a three-for-one stock split, rais­ing its is­sued shares to 994.88 mil­lion units and au­tho­rised share cap­i­tal to 1.2 bil­lion units.

The hold­ings of the top share­hold­ers prior to the stock split in­cluded NCB In­sur­ance Co Lim­ited a/c WT109, 18.13 mil­lion shares; GraceKennedy Lim­ited Pen­sion Scheme, 14.9 mil­lion; Sagi­cor Pooled Eq­uity Fund, 14.47 mil­lion; Na­tional In­sur­ance Fund, 13.9 mil­lion; Xay­maca Lim­ited, 9.06 mil­lion; ATL Pen­sion Fund Trus­tees Nom­i­nee Lim­ited, 8.47 mil­lion; FCIB (Bar­ba­dos) Lim­ited a/c 1191, 7.6 mil­lion; Dou­glas Orane with 6.8 mil­lion shares; Michele Marie Kennedy, 6.6 mil­lion; and FredKenn Lim­ited with 5.6 mil­lion.

Those hold­ings would have tripled since Au­gust, and should be re­flected in dis­clo­sures once GraceKennedy files its third a quar­ter fi­nan­cial re­port.

The stock vir­tu­ally dou­bled in price in a year from $64 at Septem­ber 2015 to over just un­der $128 in Au­gust just prior to the split. In­vestor de­mand in the stock rose af­ter GK re­leased solid earn­ings re­ports in the first and sec­ond quar­ters. The stock has kept largely sta­ble fol­low­ing the split.

The con­glom­er­ated, headed by CEO Don We­hby, made $2.7 bil­lion net profit over six months end­ing June 2016, or 80 per cent higher when com­pared to $1.5 bil­lion a year ear­lier. lob­by­ing for the re­moval of the tax for more than two years.

“It (the tax) was putting a lot of strain on the farm­ers,” Brown said, even while ac­knowl­edg­ing that the re­moval was not yet a done deal.

Pig farm­ers typ­i­cally im­port fur­row­ing crates, floor­ing, heat lamps and other im­ple­ments that mostly re­late to the build­ing as­pect of the op­er­a­tions. At roughly US$1,600 per fur­row­ing unit, a farmer will likely save at least US$260 on each unit, Brown rea­soned.

“It was ham­per­ing a lot of farm­ers to mod­ernise as fast as we would want to,” he said.

“When you im­port US$30,000 worth of equip­ment and when you add 16.5 per cent (GCT) to that, cou­pled with de­val­u­a­tion, it was com­ing out very ex­pen­sive,” the pig farmer said.

Egg farmer Roy Baker, who also heads the Ja­maica Egg Farm­ers As­so­ci­a­tion, is hope­ful the talks will also in­clude re­moval of the tax from the shelf price of their prod­ucts.

Egg farm­ers im­port pack­ag­ing ma­te­rial, which ac­counts for roughly eight per cent of in­put costs, Baker said.

“The tax on ta­ble eggs sti­fles the pro­duc­tion and the tax to con­sumers slows the con­sump­tion of eggs,” Baker said. “As a re­sult, the farm it­self can­not do the out­put be­cause we are pay­ing GCT on the in­put and out­put,” he said.

Him­self a large pro­ducer, Baker said he spends roughly $3 mil­lion per an­num on im­ports of pack­ag­ing for eggs. The re­moval of GCT will see those sav­ings in­vested in the busi­ness to boost pro­duc­tion, he said.

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