Mayberry Investments Limited, MIL, reported a substantial loss of nearly $1 billion in the quarter ending September, ahead of the overhaul of the group structure that has now gotten the court’s approval.
The sign-off positions Mayberry to move ahead with plans to delist from the stock market and for a new parent company to list in its stead.
The third-quarter downturn was mainly due to the declining value of its investments, resulting in unrealised losses, due to the persistent decline of the stock market in which Mayberry is heavily invested.
The loss for the September quarter, at $986 million, wasn’t a one-off occurrence; the company recorded losses amounting to $1.2 billion in the same quarter of 2022 due to similar market conditions.
Jamaica’s stock market is struggling to return to the pre-pandemic period when it was twice named as the world’s best performing market. Today, the market is down nearly 11 per cent year to date.
Mayberry explained that economic challenges continue with interest rates and that higher inflation could follow arising from higher wages. These factors create challenges for the Bank of Jamaica to reduce interest rates, often seen as a key ingredient to fuel the capital markets.
“This is due to anticipated future wage increases due to a tight labour market as well increases in global oil prices and the impact of continuing and escalating geopolitical tensions in several regions,” said CEO Gary Peart. “The group’s performance year to date and for the remainder of the year is expected to be affected by these market headwinds based on our business lines.”
The unrealised losses on investments not only negatively impacted the company’s trading results but also shareholder capital, which dipped by 5.0 per cent year on year to $15.8 billion at the end of September.
Despite the reduction in capital, total assets grew by more than 12 per cent to $57.9 billion primarily due to inflows from a bond issued by Mayberry.
The Mayberry group includes MIL and its subsidiaries Mayberry Jamaican Equities in which it has 50.4 per cent ownership, and Widebase, which it owns 100 per cent.
Mayberry plans to reorganise the group into a new streamlined holding company called Mayberry Group Limited, under which MIL, Mayberry Jamaican Equities and Widebase will fall.
In July, Mayberry got shareholder approval for its plan. Peart said the Supreme Court has also given its stamp of approval to the new scheme of arrangement.
The restructuring will see the creation of another new entity, Mayberry Holdings Limited, which will become the direct parent of MIL, a licensed securities dealership and brokerage. Mayberry Holdings will be directly held by Mayberry Group.
The aim of the restructuring is to separate the group’s regulated operations from its non-regulated businesses in order to give itself flexibility in fundraising and other matters.
Mayberry will swap out shareholdings in MIL for Mayberry Group at a one-for-one basis. MIL, which has traded on the Jamaica Stock Exchange since 2005, was expected to delist by early October and Mayberry Group listed in its stead. The new timeline for the swap was not disclosed.