By Durrant Pate

Radio Jamaica Ltd has petitioned the government for an amendment to its three broadcast licences as a precursor to its planned Additional Public Offer (APO) of shares to raise much needed capital for the broadcast media entity.

At present, the three broadcast licences which Radio Jamaica Ltd has to operate commercial sound broadcasting service in respect of its various radio frequencies, prescribes a limit of 10 per cent shareholding to which any single entity or individual can hold in the company. The company, which is listed and trades on the Jamaica Stock Exchange (JSE), has petitioned the Holness administration, seeking to increase the 10 per cent limit to 21 per cent.

Radio Jamaica Ltd, parent company of the RJRGLEANER Communications Group, is arguing that while 10 per cent stockholding limitations have ensured wide ownership of the company and its independence, it has hindered the company’s ability to raise capital. The need for raising capital at this time is critical, given the fact that Radio Jamaica is operating in an era where media companies are compelled to invest in new technologies to survive, thus the need for capital at this time is vital to the company’s future.

Radio Jamaica circular released

In a circular to shareholders, which was released on Monday by the JSE, the Radio Jamaica board stated that, “if the company is to raise capital, the 10 per cent limit will be a major obstacle. The company, therefore, has proposed to open discussion with the Government to amend its broadcasting licences to increase the shareholding limit to at least 21 per cent”.

The board expressed optimism that,“based on precedents, the Government will accede to our request and, in anticipation of success, we are proposing that the Articles (of Incorporation) be amended now, so that when our licences are amended, our Articles will be ready”.

The board pointed out to shareholders that the amendments to the Articles to raise the shareholding limit will only take effect if and when the Government grants approval to amend the broadcasting licences to increase the shareholding limit to at least 21 per cent.

Shareholder are slated to vote on this proposal to increase the shareholding limit to 21 per cent at the group’s 72^nd annual general meeting, which is to take place tomorrow (October 28) at The Jamaica Pegasus hotel in New Kingston, starting at 10:00 a.m. Shareholders will also vote on a resolution paving the way for the APO.

The resolution in question seeks shareholders approval for a 50 per cent increase in the company’s share capital, which now consists of 2,422,487,654 ordinary shares. The 50 per cent increase will result in an additional 1,211,243,827 ordinary shares being created for sale in the APO.

Limited financing option available but APO

The board underscored that its financing option is limited, noting that the broadcast company has no unissued float of ordinary shares, which  does not give the board any room to manoeuvre. For instance, Radio Jamaica has no un-issued capital to issue bonus shares, effect a stock split, make a rights issue or effect an acquisition in exchange for shares rather than cash.

According to the board, “it is important for a public company like Radio Jamaica Limited to have flexibility to initiate transactions in its shares – hence the need to increase the authorised capital of the company. Recent trends have been for listed companies to increase the maximum number of shares, which they can issue to an unlimited amount.”