Main Event Entertainment Group Going Public. Raising J$120m @ $2 Per Share

The Main Event Entertainment Group Limited is going public. The company describes itself as one of Jamaica’s premier event management companies. The prospectus further states that the Company is an event management, digital signage and promotions company that has become known in Jamaica for its creative and innovative services, and use of ‘state-of-the-art’ new technology.

Founded in Kingston in 2004 by Directors Solomon Sharpe and Richard Bair, each of whom worked in the entertainment and promotions business in Jamaica for over 13 years. Their collective experiences led them to establish the Company as a provider of event management, brand promotion and entertainment services under one brand.

The Directors consider that the success of the Company is based on its ability to recognize opportunities and navigate challenges. Its senior management is focused on ‘best execution’ and is highly involved in all stages of the client experience. In addition, the Company has a staff of 149 inclusive of contractors, who have the requisite experience and expertise in various key business areas. The Company also provides an integrated and ‘hassle free’ service which permits it to minimize the risk of failure by third parties, and also to be more responsive its clients’ needs.

The Company is committed to promoting ‘state of the art’ events for its clients, and to expanding its services in the Caribbean.

More about the company, and their strategy

The Company provides a diverse range of marketing, events and entertainment related services including equipment rental, graphic design, online marketing, project marketing and sound and video production. This strategy of the ‘one stop shop’ is one that the Company continues to follow because it offers the customer a more convenient, coordinated service and also, because it allows the Company to be responsive to the customer’s needs without the execution risk associated with managing a multitude of different contractors.

Although the Company provides many products and services, it is focused on complete event coordination, from concept design, planning and organization, to execution of all aspects of any event.

The Offer

The Company is now seeking to raise approximately $120 million by inviting applications for up to 60,001,000 Shares. All Shares in the Invitation are priced at the Invitation Price of $2.00 each. This values the company at ~$600m (after the issuance of the 60m new shares).

• Registration and Publication of Prospectus: Tuesday 17 January 2017
• Opening Date: Tuesday 24 January 2017
• Closing Date: Tuesday 7 February 2017
• Lead Broker: Mayberry Investments Limited

What Will The Money Be Used For?

The Directors consider that the proceeds of a successful Invitation will enable the Company to increase revenue by providing better service to existing and new customers, and to reduce expenses associated with logistics and service delivery.
 
The Board intends to use the proceeds of the Invitation :

• To purchase equipment for use in the business in order to attract and service increased numbers of customers (both contracted and one-off);
• To upgrade and expand the Company’s operations islandwide in order to reduce service delivery times and costs;
• For working capital and general corporate purposes;
• and also, to pay the expenses of the Invitation, which the Directors believe will not exceed $12.5 million (inclusive of brokerage fees, legal fees, accountant’s fees, Registrar’s fees, filing fees, initial listing fees, marketing expenses, and GCT).

Other Highlights

• The company is owned by a parent company MEEG Holdings Limited, an international business company incorporated in St. Lucia – controlled 50/50 by Solomon Sharpe and Richard Bair, the two founding directors
• After the IPO MEEG Holdings Ltd (the parent) will own 80% and the the public 20% of the Main Event Ent. Group Ltd.
• The Company’s management is supported by a highly trained and skilled staff of 149 team members, including contractors.
• 89% (53.4m of 60.0m) of the shares on offer are reserved shares, for Mayberry clients, and Key partners of the company etc.

• The company has a significant (and sustained over the last 3 years) receivables balance (money owed to the company for services provided) of $200.0m ($114.2m in 2014).
  • Of this figure, in 2015 $92.2m ($51.5m in 2014) was past due (outstanding for more than 90 days).
• • ~58% of the receivables are due to the entertainment promotions segment, ~39% remain outstanding to the digital signage segment and less than 4% to the Audio and film segment in 2015 (see chart above).
  • While net receivables (funds outstanding after bad debt) grew by 4.99%, bad debt (uncollected earnings more than 90 days) more than doubled from 2014 to 2015, moving from ($4.8m to $9.7m)
• There was a ~50% increase in staff costs from $86.7m to $131.2m primarily due to wages and salaries related to their expansion

Competition & Growth

As it relates to competition, the Directors note that in Jamaica an average of 1-2 events per day are held with a budget ranging from $100k to $100m.

• They further estimate that there are 38 event management companies operating in the Jamaican market.
• Of those companies, the Directors consider that the Company has 3 true competitors who provide packaged event management services.
• Outside of Kingston and the corporate area, competition is limited to small- to-medium type event management companies or individuals who have the ability to rent/lease equipment as needed to outfit an event.

See chart below of the company’s Fixed Assets over the last 3 years (2016 based on 11 months). The company has been making continuous investments in the audio and film category and other equipment.