PBS Perpetual Cumulative Redeemable Preference Share Offer Explained

PBS Perpetual Cumulative Redeemable Preference Share Offer Explained

Productive Business Solutions (PBS) is offering Perpetual Cumulative Redeemable Preference Shares in both US and Jamaican dollars, but what does that mean?

Who is PBS?

First, PBS is one of the largest technology companies in the Caribbean and Central America, operating in 19 countries across the region. The company offers a wide range of services broken down into six sectors:

Professional services,
Advanced services,
Communication,
Printing systems and imaging,
Information technology and
Security systems.

It offers everything from ATM and printer maintenance to airport scanners and Government IT infrastructure, such as the National Identification programmes in Jamaica and Guatemala.

What are Perpetual Cumulative Redeemable Preference Shares?

As for the offer, preference shares are shares in a company that allow investors to collect a fixed dividend. The payment of these dividends takes priority over dividends to ordinary shareholders.

Perpetual means that there is no specific end date.

Cumulative means that the dividends will continue to accumulate so that even if the company misses a dividend payment, it will be added to the next payment.

And Redeemable means that the company can redeem the shares by giving you back all the money you invested.

Speaking on Taking Stock with Kalilah Reynolds, Western Region Corporate Manager at JMMB Capital Market, Doyl Smith said that PBS has stipulated that they will not redeem the shares before 15 years.

“So, there is a very, very long time that an investor can count on the dividend stream before PBS would have the chance to call it. As a note, they can call it, it is optional but it’s not before 15 years,” he said.

The Offer

In the USD tranche, there are 1 million shares on offer priced at US$10 per share with an interest rate of 9.25%.

For the JMD offer, there are 150,000 shares for sale, priced at J$1000 per share with an interest rate of 10.5%.

This means that an investor who invests J$100,000 in the JMD tranche will receive 10.5% of that sum every year, which is J$10,500. Dividend payments are made each quarter, therefore that investor would receive a payment of J$2,625 every three months.

Smith said that the interest rates for the offers are priced on the higher end based on a number of factors, including the 15-year timeline, which is on the longer side where the tenure of investment instruments is concerned.

He also said that PBS wanted to add an incentive for investors to participate in the offer since it is new.

“They want to make it attractive. They have really, really strong growth plans, they have specific acquisition targets they want to pursue, so therefore they looked to make it something that investors would find benecifal to add to their long term portfolio,” Smith said.

Acquisition plans

Speaking about those acquisition plans, Director and CEO of PBS, Pedro Paris said that the company already has some in the pipeline, within its current operating countries.

He added that the company has a very strong mergers and acquisitions team that is always on the lookout for opportunities. The company recorded its highest revenues in 2021 following the acquisition of Massy Technologies.

Revenue story

The CEO noted that the company suffered at the start of the COVID-19 pandemic with revenues falling from US$180 million to US$161 million.

However, he said things began to pick up and revenue rose in 2021 because of a combination of factors. He highlighted that the team worked very hard to increase their effectiveness and the pandemic also forced many businesses and Governments to make changes.

“People preferred to interact with an ATM than go to a branch, so we had an opportunity there and we took it,” he said.

However, the acquisition of Massy Technologies, which was renamed PBS Technologies played a major role. The group’s revenues grew to US$224 million and only included the final quarter of PBS Technology’s results.

“The combination of the acquisition of Massy, our business dealings with the various governments of the region and our banking operations, led us to these record results,” he said.

PBS is now projecting to earn US$300 million in revenues for 2022 with about US$10 million in net profits.

WATCH THE INTERVIEW HERE

Sashell Williams2024-09-03T21:40:31-05:00