IPO will open on December 29, 2021 and closes three weeks later on January 19, 2022

Authentic Jamaican seasonings and sauces  producer, Spur Tree Spices is seeking to raise some J$335 million through an initial public offer (IPO) of shares, set to open next Wednesday (December 29).

The company is making available subscription of up to 335,391,848 ordinary shares at a price of one dollar each. The IPO is to close three weeks later on January 19, 2022.

Up to 158,108,108 shares in the IPO are reserved for key strategic partners GK Investments Limited, which is the lead arranger, and staff. The balance of 177,283,740 shares being offered to the general public.

Some 40-million shares have been reserved for key strategic partners, 108,108,108 shares for GK Investments Limited and 10-million for staff. The shares will be allocated on a “first come first served basis.”

If the Invitation is oversubscribed, the company reserves the right to allot the shares to applicants on a basis to be determined by it in its sole discretion, including on a pro rata basis. It is the intention of Spur Tree Spices to apply to the Jamaica Stock Exchange for the shares to be admitted to the Junior Market.

USE OF PROCEEDS

Proceeds from the IPO will be used to pay the IPO costs and listing expenses while the balance will go to the company to be used for the repayment of debts and to facilitate business expansion. The total invitation and listing expenses should not exceed J$25 million.

The total debt to be repaid from the proceeds raised is J$169,247,331, broken down as a payment of J$156,755,412 to GK Investments and J$12,491,919 to reduce directors’ loan. The remainder of the proceeds is to invest in capacity building, growth and expansion in both Spur Tree and Exotic Products Jamaica Limited.

Primary among these are investments in building additional operational capacity, expansion of our product offering and growth of our sales and marketing reach.

The company has increased revenue by over 20 per cent in each of the last five years. Total revenue for 2020 was over J$700 million with over 90 per cent generated from export sales.

Spur Tree Spices has steadily improved profits over the years with operating profits increasing by 123 per cent in 2020.

These positive results were achieved despite the difficulties caused by the pandemic, which has curtailed direct marketing initiatives and rollout of new products in the company’s primary markets.

BENEFITS OF LISTING

The directors firmly believe that the regulatory and reporting requirements of the Junior Market of the JSE will strengthen the overall governance structure and practices of the business to the benefit of all stakeholders. If the company is admitted to listing on the Junior Market, it will take advantage of the special concessionary tax regime that is currently in place, which provides a junior market company with a ten-year tax relief.

The remission of tax requires the company to meet the ongoing Junior Market requirements for at least 15 years from the date of listing. Assuming that those conditions are met, in the company’s first five years on the Junior Market, the company will not be liable to pay any corporate income tax.

In years 6 to 10 on the Junior Market, the company will be liable to pay corporate income tax at half of the usual rate. If the company breaches the requirements of the Junior Market it may be liable to repay the tax that was remitted.

OUTLOOK AND GROWTH

The outlook for Spur Tree is very positive as the company plans to expand its current growth trajectory.

Spur Tree recently completed the purchase of Exotic Products Jamaica, an ackee factory in St Thomas.

Ackee is a highly demanded strategic product in our export markets and the company plans to rationalise the operations of this newly acquired entity to double production over the next two years.

This, combined with our plans to expand and grow the current Spur Tree product range, while expanding current markets both locally and overseas and accessing new markets should significantly improve our sales and profit performance in the coming years.

Spur Tree Spices Jamaica has been in operation for the past 15 years. The company currently operates out of a 20,000 sq. ft. manufacturing facility at Garmex, located at 76 Marcus Garvey Drive in Kingston.

The company specialises in production, distribution and the sale of authentic Jamaican seasonings and sauces, for both retail and food service markets. Spur Tree is a leader in this space as the company was one of the first to market with a wide range of convenient, easy to use “all in one” wet seasonings.

These include its signature oxtail, curry, brown stew, jerk BBQ and all-purpose seasonings. In addition to our premium seasonings and sauces, Spur Tree offers a wide range of high-quality complimentary products which distinguishes it from other brands.

Overall, the company has a solid range of products that are loved by customers locally and abroad. Products are available in Jamaica, United States, Canada, United Kingdom, Cayman Island, Costa Rica and Australia through several distributor outlets.

Products can be found in all major local supermarkets and are used widely in various hotels.