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Innovative Energy Group Limited, IEG, formerly known as Ciboney, more than doubled its share capital during the quarter ended May, resulting in the public float falling below the 20 per cent minimum required by the Jamaica Stock Exchange for a listed company.
Innovative Energy, which has transformed into a renewable energy solutions provider, described the situation as temporary and pledged to restore public ownership in due course.
The group increased its total shares to 1.3 billion units from 526 million, leading to a change in its ownership structure. IEC Energy Company Limited, the largest shareholder, expanded its holdings from two-thirds to over four-fifths of total shares, which is above the 80 per cent threshold that operates as a corollary to the 20 per cent rule.
“The overage is temporary and came about in the issuance of the new additional shares when IECL was purchased by IEG. The JSE is therefore aware of the action plan,” IEG Director Wayne Wray said, in response to the Financial Gleaner.
He said the additional shares would be offloaded to new shareholders and Innovative Energy’s staff under an employee share ownership plan.
According to the company’s new disclosure of its top owners, IEC Energy Company Limited now holds 1.1 billion units, or 83.9 per cent of total shares. That entity is controlled by a St Lucia-registered vehicle, along with Nigel Davy and Jennifer Davy.
The share increase also allowed a new shareholder, investment firm Infiniti Capital Limited, to acquire 31 million shares, or 2.3 per cent of the company. Infiniti is controlled by St Lucia-based Resiliere Inc, along with Whycliffe Cameron, Michele Lewis, Everton Lewis and Sonja Leighton.
Existing shareholders of IEG, Operor Auctus Limited, Claudine Murphy and Nkrumah Oneil Wilson, added 12 million, 2.4 million, and 1 million shares, respectively. Operor Auctus is jointly controlled by attorney Marc Ramsay and Anna-Lisa Ramsay.
The JSE requires a minimum public free float of 20 per cent held by at least 100 shareholders. Although there is no explicit cap on individual holdings, exceeding 80 per cent ownership would mathematically reduce the public float below the regulatory threshold.
Under JSE Rule 402, a listed company that fails to maintain “a minimum of 100 share/stockholders”, holding not less than “20 per cent” of the issued ordinary capital of the listed company, “may be fined and/or be suspended and/or be delisted”.
JSE Managing Director Marlene Street Forrest said the exchange was ware of IEG’s status.
“Our rules make provisions for the company to address this,” Street Forrest said.
She later issued additional comment, saying the stock exchange was still in the process of determining whether to declare the overage as a breach of the rules.
“Please note that Rule 402D provides, in case of a breach, the company has a period of six months to address the breach before the action of suspension. Having regard to JSE Rule 402C(iii), we are in the process of reviewing the matter to determine whether the company is in breach of JSE Rule 402B(i)(b),” Street Forrest said via email.
Despite the dilution of existing shareholders, the IEG stock price has been stable – trading between $1.24 and $1.26 during the period.
The share issuance was linked to IEG’s acquisition of Innovative Energy Company DBA IEC SPEI Limited, which was financed through a mix of cash, debt and equity, and reduced liabilities by $955 million.
That acquisition transformed the shell operation of Ciboney, a resort company, into an operational renewable energy firm.
Meanwhile, IEG reported a quarterly loss of $40.9 million due to client delays on two major projects. However, it posted a full-year profit of $76.3 million on revenue of $235.7 million, rebounding from a prior-year loss of $10.98 million.
IEG also made its first sale in the electric golf cart segment, targeting resorts and large-acreage businesses. “Our budding electric golf cart business segment has delivered results,” the company reported to shareholders. “We are pleased to report our first major sale to a local golf course,” it said.
To support its expansion, IEG has launched a commission-based crowd sales team, and is telegraphing confidence in the direction of its business.
“We are satisfied with the results and trajectory of our diversification strategy and will continue to expand our regional market presence,” the directors said in their quarterly report to shareholders and the market.
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