By Anthony Morgan

Speculation about the future of Ciboney Group Limited may be fuelling the recent hike of the company’s share price, according to THE ANALYSTS of Taking Stock.

The company’s stock, which ended 2020 around $0.22 jumped to as high as $2.13 on February 25, 2021 – a nearly 900% increase in less than two months!

The Ciboney Group is currently a shell company with no assets.  It is owned by FINSAC, the entity formed to allow the Government to assume management or control of a number of failed financial institutions during the 1990s when the country was experiencing its worst economic meltdown.

According to Business Writer at the Jamaica Observer, David Rose, the company has been losing money each year. It sold its last asset, a beach in Westmoreland, in 2018.

“They paid a $0.34 dividend, a dividend higher than the stock price at the time as their stock was around $0.12 cents and then the stock picked up and came back down and that’s just it,” noted Rose.

However, in recent days, there have been rumours about FINSAC finally finding a buyer for Ciboney, with an arrangement which would benefit the potential owner.

FINSAC had last announced plans to sell the company back in August 2020, when the stock price was around $0.11 but that plan never materialized. 

Reverse takeover?

“Directors have tried, saying we’re hoping to sell the company to somebody else and the proposition is that a person that wants to list on the JSE should buy Ciboney and do a reverse takeover and list on the JSE without going through several processes,” reasoned Rose. 

“The normal route you’d have to take to list would include going to the FSC, the JSE, Companies Office, incur several fees, so if you’re able to take FINSAC’s stake in a reverse takeover on the JSE, that’s a clear direct opportunity for you to list a company without having to go through all these steps,” he added. 

However, Rose said no confirmation has been made on the recent assumptions.

“So you’ve been seeing over the last couple weeks people have been buying up on Ciboney because the price kept going up,” said Rose. “The main thing that would drive up Ciboney’s price is potential speculation generally along with the idea that FINSAC has found a buyer because if they found a company that can drive significant value of the company then you’re getting this company for a steal,” he added.

At the same time, Taking Stock host, Kalilah Reynolds, said the rumours she had been hearing involved a profitable company being the new owner but did not disclose the name due to the nature of the situation.

Ciboney refutes rumors

A potential reverse takeover of a listed company is not novel.  Precedent was set around 2018 when SSL Venture Capital took over the failing C2W Music.

However, Group Sovereign Research Analyst at JMMB, Theodore Mitchell said people were hyping up the stock price for unfounded reasons.

“I’m not seeing anything which would warrant the increase in value so I think it is nonsensical and perhaps individuals are chasing value that is not there,” he said. 

Ciboney Group has also released a corporate disclosure on the matter. 

“We are not in possession of any material information that would have contributed to the recent trading levels in the company’s shares and are also not aware of a reverse takeover of the company,” said a statement posted on the JSE’s website. 

Investors are expecting to get a further update on the matter at Ciboney’s virtual Annual General Meeting, set for March 16, 2021.

This will be the company’s first AGM in three years. Ciboney’s stock price has since fallen substantially.  It ended trading on Friday, March 5 at $0.64.

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