Local group, EDJ Acquisition, formed to launch Petcom bid
A LOCAL group of gas station owners calling themselves EDJ Acquisition Company Limited are to bid for the assets of Jamaica's fourth largest petroleum marketing company, Petcom, the Financial Gleaner has confirmed.
The consortium includes Trevor Heaven, Hugh Coore and Ewart Scott as EDJ's chairman, but while they are listed as directors of the company, only Scott has an equity stake in EDJ. He holds one of three shares. The other two are held by Dean Peart and Jeremy Barnes, Companies Office records indicate.
The company was created in February to launch the bid for the state-owned gas station network.
And if they succeed, the group plans to take the company public.
"EDJ means 'existing dealers of Jamaica' and that pretty much tells you our mission," said Scott. "We want to acquire the Petcom business so that it remains in local hands for the people of Jamaica to benefit from."
That same nationalism was on display in April when some of the same gas station owners - Heaven and Coore - were explaining why they banded together in another venture - the formation of their own petroleum marketing company, Fesco.
That operation started small with four stations in the network to date, and plans for another six by yearend. Petcom is a more ambitious goal - it has about 24 gas stations wearing the brand, two inactive stations and 14 liquid petroleum gas filling stations.
EDJ Acquisition is being advised by Marcus Richards of Greystone Capital and Oliver Holmes of Capital Options. The group is attempting to get ahead of the competition through early deals with service station owners in the Petcom network.
Petroleum Company of Jamaica owns eight of the active Petcom service stations in its network, which are located at Slipe Road, Kingston; Twickenham Park and Portmore in St Catherine; Negril, Westmoreland; and Santa Cruz, Black River and Southfield in St Elizabeth. The inactive two are at Lluidasvale, St Catherine, and Osbourne Store, Clarendon.
Of the other 16 independently owned stations, Scott said EDJ Acquisition has struck agreements with eight of them, as well as eight of the LPG dealers.
Petcom is believed to be worth around $2 billion, an estimate partially based on industry talk that an informal bid of US$20 million had been placed at one time before the Jamaica Government.
Divestment agent Development Bank of Jamaica itself had said last year that it got around eight expressions of interest, but that was before the asset went to tender.
Petcom controls around 12 per cent of the petroleum distribution market with sales of around $10 billion per year.
"We as dealers would like to have some control over our destiny. We think at this time of our existence - most of us have worked in this industry for 10 or 20 years - we think that we have the skills necessary, along with the capital to take charge of that destiny," said Scott.
"We think it's time that locals control some of the larger companies as our experience has shown that it can be done."
EDJ Acquisitions wants to wrap up agreements with the outstanding dealers ahead of the bid submissions, which are due by June 30, in order to boost its chances.
"We don't think that a foreign company can do any more in assets or technology than is available locally," said Scott.
If it wins the bid, EDJ Acquisition plans to pay for the asset through debt financing, but would later float the company on the Jamaica Stock Exchange via an initial public offering. Some of the IPO proceeds would be used to pay down some of the loans.
"We want to give the people of Jamaica both a say in what we are doing and also to invest in the marketing company. We want a company that people can invest in and share the rewards," Scott said.
With the addition of Fesco, there are now 18 marketing companies in Jamaica. But while the majority of the companies are owned by Jamaican's, the market is dominated by the foreign brands - Texaco/GB Energy; Rubis Energy; and Total, which, by Petcom's estimate command 72 per cent of the market. Petcom estimates its share at 12 per cent, while the other 14 players share 16 per cent of the market.