Seprod sells bleach assets to Paramount ... Becomes its customer in confidential deal
Paramount Trading Limited upgraded its chlorine plant and will start producing bleach at another plant after striking a deal with Seprod Limited in October for its bleach assets.
Paramount will repackage chlorine products at one plant, mainly for the National Water Commission (NWC), and will use the byproduct from that operation to produce bleach under contract for Seprod, starting February.
The separate chlorine plant runs two days per week on an eight-hour daily shift.
"We have a lot of capacity to fill. I think that's a good problem to have," said Paramount's managing director, Hugh Graham.
Paramount will manufacture and package several brands for Seprod, including Cannon. But the partners were not willing to name the others. Graham also told Gleaner Business that he would be going after other clients, but first intended to perfect the Seprod supply deal.
The chlorine plant will repackage 1.0 ton cylinders into smaller 150lb cylinders that are more popular in the market. Graham said liquid bleach is a result of the conversion into smaller cylinders.
"Most people don't know we are the largest chlorine distributor in the island, and NWC is the largest user," the Paramount boss said, whose core business is lubricants. "So we also just put in a plant to repack chlorine. Then in that process of converting to smaller cylinders, the byproduct ends up being bleach. So we will end up in the bleach business by default," he said.
Having upgraded its chlorine operation, the company began looking for an opportunity to buy a bleach plant, he added, and landed on Seprod. The negotiations began six months ago.
Graham said the purchase price for the Seprod assets is confidential.
"The investment would be in the region of $110 million. That includes the purchase of the Seprod assets as well as putting in the repacking plant," he said.
The plants are housed at Paramount's 6 East Bell Road, Kingston location.
Graham said in a release that the chlorine and bleach line would augment Paramount's existing food ingredients and industrial chemicals businesses, creating new jobs.
"The company expects to hire up to eight new staff members in the first instance," he said.
The acquisition, he continued, aligns with the quarter-century-old company's goals to strengthen its presence in the chemicals market as a manufacturer.
Paramount Jamaica made net profit of $34 million on revenues of $331 million for its first quarter ending August. Profit spiked 126 per cent in the quarter relative to last year.
Full year revenues grew 13 per cent to $1.15 billion at the end of May, from which Paramount carved a profit of $101 million. The total assets are just shy of $1 billion.
Founded by Graham in 1991, Paramount began operations in Kingston as a manufacturers' representative and commission agent. In 2012, the company was listed on the Jamaica Stock Exchange.
Paramount distributes Sika construction products, concrete admixtures, waterproofing or moisture protection products, floors and protective coating, sealants and elastic bonding, raw material chemicals, and lubricants and oils made by joint-venture partner Allegheny Petroleum.
Paramount and the American company are joint investors in a new lubricants manufacturing operation that Graham now says will be completed early in 2018.
He said the engineering works are completed, but civil works related to the yard and paving are a bit behind schedule due to weather.