Regency Petroleum Co Limited (RPL), a licensed petroleum bulk distributor in Jamaica, has announced an upcoming initial public offering (IPO) of its shares on the Jamaica Stock Exchange (JSE) Junior Market to settle its existing debt and expand operations.
The offer opens at 9:00 am on November 24, 2022, and closes at 4:30 pm on December 8, 2022.
With GK Capital Management Limited (GKCM) as the lead broker for the IPO, RPL is issuing a total of 287,157,354 shares at the subscription price of J$1.00 per unit. Of the total, 115,196,354 shares are open to the public, while 171,961,000 are reserved for priority applications and subscription. GK Investment Limited will account for 100,000,000 of the shares reserved for priority applicants. The remaining 71,961,000 reserved shares represent associate loan conversion, RPL employees and strategic partners.
“RPL hopes to raise just over J$287 million from the share offering and plans to use approximately J$160 million of the proceeds to liquidate its total existing indebtedness. This move should assist the company in optimising its capital structure for further growth and enhance free cash flow,” shared Ryan Strachan, vice president of investor relations at GKCM.
Approximately J$75 million of the funds raised are slated to go towards completing RPL’s Paradise Pen Service Station in Westmoreland. This new service station will incorporate modern technology and equipment and feature a state-of-the-art convenience store. Construction is expected to be completed by the end of 2022 and the location is expected to be open to the public by the end of the first quarter of 2023.
With RPL also working towards a modern service station in Negril, Dr Andre Foote, chairman of RPL’s board of directors, opined that the company’s bold innovation and decision-making will continue to set it apart and see it through achieving its goals.
RPL Chief Executive Officer Andrew Williams agreed, adding: “The steps made during the peak of the pandemic, to include the opening of our first service station in Westmoreland, have helped to take us closer to realising the vision we have for RPL and demonstrates our willingness, to go above and beyond as we enter this exciting new phase of development.”
The remaining proceeds from the IPO will be allocated towards expanding RPL’s liquified petroleum gas (LPG) operations by purchasing additional cylinders to satisfy growing demand. RPL supplies bulk LPG to established bakeries, restaurants, and hotels islandwide and has seen consistent growth of this business segment amid increasing demand. The expansion of its LPG operations will also allow for a wider customer base in Kingston and St Andrew.
Should RPL succeed in raising its target through the IPO, it intends to seek a listing of its shares on the Junior Market of the Jamaica Stock Exchange.
RPL’s vision to continue raising the bar in its provision of the nation’s petroleum needs is the main reason for the listing, according to Williams.
“In my view, the future for the petroleum industry is very promising and I have personally invested significant sums into RPL to continue driving its growth and expansion. We are confident that prospective investors will join us in fueling Jamaica.”
Since commencing operations, RPL has grown exponentially from distributing cylinders solely in Westmoreland to distributing islandwide and operating a profitable service station. The company increased revenues from J$44.8 million in the 2019 financial year to J$606.6 million for the 2021 financial year, which reflects a compounded average growth rate of 268 per cent.