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Jamaica Producers increases investment in Newport West

Published:Friday | May 20, 2016 | 5:00 AMSteven Jackson
Chairman of Jamaica Producers Group, Charles Johnston (left); Managing Director of Jamaica Producers and Chairman of Kingston Wharves, Jeffrey Hall (centre) and CEO of Kingston Wharves Grantley Stephenson, are seen here on at the Kingston Wharves port at Newport West, Kingston during delivery of a new crane on November 20, 2015. Jamaica Producers made a strategic investment in a company with interest in Newport West properties in the first quarter of 2016.

Food and logistics conglomerate Jamaica Producers Group (JP) increased its stake in lands by Newport West in Kingston through a deal that nearly tripled its holdings in the largely unknown Shipping Association of Jamaica Property Limited (SAJPL).

Concurrently, JP's interest in joint venture and associated companies increased by $520 million during the period of acquisition, however, management would not disclose the purchase price of the additional shares in SAJPL, a private company.

Strategic push

The move resulted in SAJPL becoming an associated company of Jamaica Producers Group. That investment represented a strategic push towards fortifying the conglomerate's investments in logistic activities, said JP Chairman Charlie Johnston in a phone interview on Wednesday. Johnston is also a director in SAJPL.

"They own property at Newport West and they also have a decent shareholding in Kingston Wharves. So with the whole logistics drive, it was a strategic move to acquire the shareholding, especially since they are a large property holder," said Johnston.

JP is itself the primary shareholder in Kingston Wharves Limited (KWL) with a 42 per cent stake in the port company.

During the first quarter ending April 2, 2016, the group increased its stake in SAJPL from seven per cent to 20 per cent. The property company has land and investment holdings primarily in the Newport West area of Kingston, home of the cargo shipping ports, including Kingston Wharves.

Johnston said SAJPL plans to engage in capital upgrades of its rental lands, independent of Kingston Wharves, own ongoing multibillion-dollar upgrade. It is aimed at beautifying and modernising the zone ahead of expected increased business activity in the area.

"As the value of the property increases, so, too, will it increase the value of our investment," said the JP chairman, who declined to reveal the price of the SAJPL share acquisition.

However, the group's balance sheet at April 2 valued Jamaica Producers' interest in joint venture and associated companies at $5.12 billion, compared with $4.6 billion in December 2015.

JP made net profit of $144.5 million on revenues of $2.1 billion for the first quarter 2016 or 9.1 per cent less profit than year-earlier levels.

SAJPL, which engages in the rental of lands, operates from 5-7 King Street, Kingston. The directors include William Brown, Grantley Stephenson, Kim Clarke, Roger Hinds, Joseph Lowe, Charles Johnston, Robert Kinlocke, Jeffrey Hall. Shareholders or their proxies in SAJPL include Alister Cooke, Francis Kennedy, Paula Pinnock, Donavan Martin, James Worton, Ruel Gibson, Ludlow Stewart, Evroy Johnson, Charles Johnston, Harry Maragh, Corah Ann Sylvester, Diedrich Suendermann, Denise Lyn Fatt and Michael Bernard,

Last year when National Commercial Bank exited its investment in Kingston Wharves, Jamaica Producers used the opportunity to cement its position as the top shareholder, moving from 30 per cent ownership to 42 per cent. Johnston indicated that the increased acquisition of shares in SAJPL would "not directly, but indirectly" increase Jamaica Producers' shareholding in KWL.

The JP group holds $6.6 billion in equity, compared to $5.76 billion a year earlier. Also, during the quarter, the group commenced the closure of mining operations in its Four Rivers Mining Company Limited subsidiary, a process which is expected to continue into the second quarter. JP plans to exit the business after five years and has put its stake in the mining company up for sale.

steven.jackson@gleanerjm.com