Ciboney investors are laughing all the way to the bank! Cha-ching! Here’s how a high-risk investment finally paid off big time!

Ciboney investors may be feeling vindicated now that news has emerged that the company has a new owner… finally!

According to a notice on the JSE’s website, the Financial Sector Adjustment Company or Finsac has sold its 72% stake in Ciboney.  The buyer is Wiltshire Consulting and Advisory, owned by businessman, Wayne Wray.  Last name sound expensive, don’t?

Now this isn’t the first time Ciboney has had a buyer. They were in the closing stages of a deal last year, but it fell apart. 

This time it’s official though. Finsac said the deal was completed on June 29.

Finsac acquired Ciboney in the 90s as part of its mandate to help companies on the verge of failing due to the infamous debt crisis of that time. 

Ciboney listed on the Jamaica Stock Exchange back in 1993. But for the past several years, it’s dwindled down to only a shell of a company. Management sold off its last asset, a property in Westmoreland, in 2018. 

That means the company was not making any money.  As one of our analysts on Taking Stock, Clive Charlton said recently, it had no real value. Finsac has been trying to offload it for years now.

And you’re probably wondering what’s the point of taking over or investing in a shell company? Especially one like Ciboney. The company is operating $3 million in the red, according to its May 2023 financial year report. So why bother?

Well, the value is in the fact that it’s already listed. Going through the IPO process can be very expensive and time-consuming.  There are auditor’s fees, lawyer fees etc. So, it may be more cost-effective for a company that wants to list, to acquire a company that’s already listed. And there’s precedent for this.  Just last year, MFS took over SSL Venture Capital and took its spot on the JSE.

If you’re a real market watcher, and if you’ve been watching Taking Stock for a while, then you know Ciboney has been one of the most volatile stocks on the JSE in recent years. In February 2021, the stock’s price ran up to $2.30, and then by March it fell to just 20 cents. 

Because despite having no assets and not providing any real value to shareholders, some investors have flocked to the stock based on market speculation. So it has a certain level of exposure that could be beneficial to the company that takes it over.

There are a couple of things we still don’t know yet, like the cost of the transaction and what the company’s new business model will be.

According to the notice, Wiltshire intends to transfer the shares to one of its subsidiaries, IEC Energy Company. 

According to IEC’s website, they specialise in developing, financing, constructing, operating and managing clean energy solutions. 

Nigel Davy, who was named Ciboney’s new Chairman after the deal was completed, is a director at Wigton WindFarm. And Wayne Wray, the owner of Wiltshire, is also the managing director of a company called 365 Retail that operates a Total Energies gas station.  So, you can put two and two together. 

In any case, it’s exciting news for the Ciboney true believers. The stock’s price closed on July 4 at $1.55 after trading in the 60 cents region since April.