My Thoughts on Technology and Jamaica: Mr. Josef Bogdanovich buys 14% stake in KLE - Downsound Records bets on Usain Bolt's Tracks & Records Franchise as his Career switches Gears

Thursday, September 18, 2014

Mr. Josef Bogdanovich buys 14% stake in KLE - Downsound Records bets on Usain Bolt's Tracks & Records Franchise as his Career switches Gears

Looks like yet another Matalon is being saved by the bell as was the case with ADV Communications, a Call Center located in New Kingston as described in my blog article entitled How to find work in Jamaica at Call Centers - ADV Communications is a New Call Center Coming to The Towers on Dominica Drive in New Kingston”.

This as Mr. Gary Matalon owned KLE is slowly being taken over by Mr. Josef Bogdanovich, who now has the largest share in the company, owning some 14% of the company as stated in the article “Downsound Records owner acquires 14% of KLE”, Published Wednesday September 17, 2014 by Tameka Gordon, Gleaner Writer, The Jamaica Gleaner.

As of last December 2013, KLE had six (6) Directors:

1.      Mr. Gary Matalon
2.      Mr. Kevin Bourke
3.      Mr. Zuar Jarrett
4.      Mr. Stephen Shirley
5.      Mr. David Shirley

In December 2013, they had a total of six (6) million shares among them, which apparently had increased somewhat since the start of 2014 to JA$100 million by the time the Stock Sales to Mr. Josef Bogdanovich took place as stated in “Bogdanovich takes largest stake in KLE”, published Wednesday, September 17th, 2014, The Jamaica Observer.

By July 2014, Mr. Josef Bogdanovich acquired 7.18 million shares from KLE Director Craig Powell. By Tuesday September 9th 2014 he approached KLE Director Kevin Bourke and was able to acquire 8.1 million shares and well as an additional 5.9 million from yet another KLE Director Zuar Ard Jarrett. A Virtual who's who of Directors handing over that much control of their company indicates that they must have been seriously cash-strapped indeed, even if they still hold on to some of the shares in their company.

All told, that adds up to 21.18 million shares, but the Jamaica Gleaner recounts a total of 14 million shares purchased by Mr. Josef Bogdanovich that gives him a 14% stake in KLE. He purchased the stock for JA$1.00 each, the price it's been trading since July 2014 after it had lost ground 52 weeks ago from JA$1.61 to JA$1.00. Mr. Josef Bogdanovich purchased these 14 million shares for JA$13.9 million.

Good to note that Mr. Craig Powell is no longer a Director at KLE, having resigned since Monday August 11th 2014, a month ahead of the KLE Director Kevin Bourke and Zuar Ard Jarrett sold their shares, suggesting that he was jumping ship.

The sale of shares of KLE, which is traded on the JSE (Junior Stock Exchange), represents the largest block of transactions since they were listed in 2012. Gary Matalon and Friends (catchy right?) have also ceded 40% ownership of Fiction Night Club to Mr. Josef Bogdanovich, retaining the remaining 60% of that well-hoofed Portmore based Club.

Mr. Gary Matalon apparently still holds 13.6 million KLE shares and so does Usain Bolt via Sherwood Holdings clocking in at 6.7 million units post the sale to Mr. Josef Bogdanovich, quote: “He has about 23 per cent of the shareholding and I have 16 per cent.......Based on his contacts and experience over the years, it's an honour to work with someone like that”. They’re still holding strong despite the errant parting of Mr. Craig Powell from KLE.

So yes, quite a deal indeed!

14% stake in KLE - Tracks & Records is the Fiction of a Famous Night Club's Odyssey Gaming Lounge

In case you’re been living under a rock, Mr. Josef Bogdanovich is the owner of Downsound Records, the Studio and Record labels who produces such notable Dancehall Artiste such as:

1.      Scare Dem Crew
2.      Lukie D
3.      Nanko
4.      D.Y.C.R.
5.      Ninja Man
6.      Sugar Minott
7.      Frankie Paul
8.      Ninjaman

He's also the famed promoter who brought Sting to Pay Per View in December 2013, as noted in the article “Sting goes int'l via pay per view TV”, published October 25th 2013, The Jamaica Star, albeit it didn’t do so well.

A full bio of this prolific American Producer who's taken a love to Jamaican Dancehall can be read in this article “Who Is Josef Bogdanovich?”, Published Sunday December 8, 2013, The Jamaica Gleaner.

Downound Records was embroiled in some legal wrangling with the KSAC with regards to his Music Studio being located at 43 St Andrew Park, Kingston, being in a zoned Residential area as reported in “KSAC gets judgement against Downsound to close music studio”, published Saturday, July 19, 2014 9:13 AM, The Jamaica Observer.

Downsound Records eventually complied, relocating his studio from its current location to a new location in Kingston as reported in “Down Sound Records to comply with court injunction”, published September 9, 2014, Irie FM.

He's also fond of buying stocks and bonds on both the Local and US Stock Exchange, owning a sizable chunk of Heinz, makes of Ketchup and other products. Albeit Downsound Records has yet to comment on the purchase of shares that took place in July 2014, it is known to be about 14% of the total share in KLE, a struggling entity that owns the following Night Clubs:

1.      Fiction
2.      Famous Night Club
3.      Usain Bolt's Tracks & Records
4.      Odyssey Gaming Lounge

Anatomy of KLE Stock Sale - Usain Bolt's Tracks & Records profitable as his career switches Gears

But what would CEO of David Annakie's Linkup Media Group of Companies Mr. Josef Bogdanovich take so much interest in a company that has a failing business model?

The company is still profitable as over a six month period ending June 2014 based on the following statistics:

1.      21% Loss in Revenues totalling JA$116 million in Revenues, compared to JA$147 million over a six month period ending June 2013
2.      40% declined in Operational Expenses to JA$21 million in Operational Expenses, compared to JA$35 million over a six month period ending June 2013

The Losses are also on the decline as well in the First Quarter of 2014:

1.      JA$12.6 million loss compared to JA$17.2 million in the First Quarter of 2013

Apparently Mr. Gary Matalon had approached Mr. Josef Bogdanovich back in May 2014 to invest in the struggling company, quote: “I approached him months ago and basically had been talking with him on possibly collaborating on some of the things that we want to do for KLE. What I did was introduce him to everything that I was working on to see if there wasn't some way or the other that could help to improve and fast-track what we were doing”.

It may have to do with the Brand Value of the Usain Bolt's Tracks & Records, as it's the only valuable asset in the group of Clubs owned by KLE, which KLE has plans to Franchise the Famous Track star's Nightclub.

This as it’s a branded commodity and Usain Bolt, despite his career showing signs of winding down as he switches to Cricket as stated in “Usain Bolt takes part in exhibition cricket match in India and is beaten over 100m by Yuvraj Singh!”, published  2 September 2014 15:44 GMT, The Daily Mail makes the KLE stock purchase very attractive.

To quote Mr. Gary Matalon: “His initial interest was on Famous nightclub then he became interested in the overall KLE Group because of our intention to franchise the Tracks & Records brand. Then he said that he wanted to be involved in everything. In order for us to execute our [partnership] he wanted to ensure that he has a meaningful stake”. Companies and products that are branded with the name of a famous celebrity tend to do well, as the allure of that celebrity's glory day's last on, especially that of Usain Bolt aka World Best.

This acquisition is on the same level as Apple buying Beats Electronics for US$3.2 billion back in May 2014 as stated my blog article entitled Apple officially confirms Beats Audio Purchase - US$3.2 Billion as Apple gears up for Subscription Streaming and improved Headphones”.

It's also a lot like Glu Mobile's making of the Kim Kardashian: Hollywood launched on Wednesday July 25th 2014 that's estimated to be worth some US$200 million by December 2014 as explained in my blog article entitled Glu Mobile's Kim Kardashian Hollywood App - Anatomy of How an A-List Celebrity based App propels In-App Purchases”.

By buying a 14% Stake in KLE, Mr. Josef Bogdanovich is setting the stage to aquire more of the company for the obviously desperate and cash-strapped Directors, one of whom has already jumped ship as the economy worsens and the patron numbers dwindle as disposable income becomes harder to come by.

In essence, Mr. Josef Bogdanovich is not betting on the current Brand allure of the company but in the future valuation when Usain Bolt's Career finally settles down and his Brand begins to rise again, akin to the Apple purchase of Beats Electronics or Glu Mobile's Kim Kardashian: Hollywood.

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