Fri | Aug 17, 2018

Wallenford deal yet to close one year later

Published:Friday | August 29, 2014 | 12:00 AM
Investor Michael Lee-Chin acquired Wallenford through subsidiary AIC International. - File

Avia Collinder, Business Reporter

IT HAS been a year since Michael Lee-Chin's company took control of the assets of Wallenford Coffee Company, but the Ministry of Agriculture disclosed on Thursday that the deal is still pending closure.

Discussions on how the operation will be restructured are ongoing, but are in the final stages, according to Permanent Secretary Donovan Stanberry.

Cabinet will have to sign off on the final plan, he said.

One year ago, the Government announced the agreement to sell Wallenford to AIC International Investments Limited (AIIL) in a deal worth US$39.5 million (J$4 billion). AIIL is a wholly owned subsidiary of Lee Chin's company, Portland Holdings Inc.

Wallenford had accumulated losses of $2.36 billion and net assets of $67.75 million up to February 2013.

Of the US$39.5 million, Development Bank of Jamaica (DBJ), which brokered the sale, said US$16 million would flow to the Jamaican Government, while AIIL would inject capital of US$23.5 into the development and expansion of Wallenford over four years.

Payments on track

Asked whether AIIL had paid over the US$16 million for the estate, Stanberry said the payments were to be made according to an agreed schedule, and were so far on track.

AIIL assumed control of the Wallenford operations on September 11, 2013. The transaction was set for closure in six months thereafter, or by March 2014, but has been delayed.

"We have now reached the stage where we have satisfied all conditions for a definitive agreement," Stanberry said on Thursday.

Managing director of DBJ, Milverton Reynolds, adds that the parties are now working to close the deal in September. Government is assuming the coffee company's debts held by the PetroCaribe Development Fund, the EEC, and Ex-Im Bank, Reynolds said.

Efforts at getting a comment from Portland Holdings on the status of operations at Wallenford were unsuccessful.

Stanberry said the conditions being examined for the definitive agreement involved the restructuring of the company, including "which workers to keep and which to let go", and issues relating to inventory and working capital.

"The agreement should be placed before Cabinet soon," he said.

He also noted that AIIL got no special incentives, over and above that which is available to other companies, but did not specify what was in the agreement.

Earlier in the negotiation process, access to government incentives had been mentioned as a sticking point.

"Remember, it was one year ago that we signed the MOU, which handed over the asset to them. We are at the stage now where we have satisfied all the conditions and are about to sign the definitive agreement," Stanberry said.

Wallenford is Jamaica's largest coffee estate and was once the largest processor of green beans originating from the Blue Mountain and high mountain regions.

Industry sources said on Wednesday that the company is no longer the number-one producer. In the crop year just ended in July, the entire sector is said to have produced 164,000 boxes of Blue Mountain cherry coffee.

The DBJ disclosed last year that Wallenford has access to more than 5,000 acres of Blue Mountain coffee land and the capacity to process more than nine million pounds of coffee in its facilities.