Fri | Sep 21, 2018

Coconut Board weighs foreign road show among fundraising options

Published:Sunday | August 26, 2018 | 12:00 AMAvia Collinder
In this June 6, 2018 photo, a man sits atop a van full of coconuts. The Coconut Industry Board expects its revised commercial plan for the coconut sector to be finalised by September.

Coconut Industry Board consultants are expected to produce a revised draft of a $3-billion commercial plan for the agency, but the go-ahead appears to be contingent on the potential costs involved in delivering it. Those discussions are expected by September.

Chairman Christopher Gentles says the options include a roadshow abroad to pitch the plan to companies domiciled overseas, or creating a corporate vehicle for an initial public offering of shares on the Jamaica Stock Exchange.

Gentles said the "safest funding options" would be chosen by the board and its private sector partners.

"You can raise the funds here or in US dollars. You can raise the funds in the United Kingdom or in the United States, which is an option because you have several Fortune 500 and smaller companies that need a quality supply chain for coconuts in Jamaica," he said.

The initial plan for the Coconut Board's commercial operations was done last year. It proposed ventures such as green coconut water packaging plant, production of virgin coconut oil, a cocoa fermentary and a chocolate-making facility under an intercropping programme. The plan proposed that the coconut board take an initial 25 per cent share in each of the joint ventures, and identify partners for the rest.

However, in May, the Ministry of Industry, Investment Commerce Agriculture & Fisheries (MICAF) asked for a comprehensive business plan, including the structure of a special-purpose vehicle and options for raising funding.

Gentles says consultants PricewaterhouseCoopers is to present an outline for a second draft of a coconut sector plan, following new instructions flowing from consensus achieved at the annual general meeting held earlier this year in Kingston.

The plan, once finalised and signed off on by MICAF, would then go to Cabinet for approval.

"We are putting a proposal to Cabinet to be approved. We met with the minister and the PS [MICAF Minister Audley Shaw and Permanent Secretary Donovan Stanberry] and they approved significant changes prior to a Cabinet submission," he said.

The new PwC plan is also expected to show cash flow projections and detailed budgeting, which were not included in the first draft when the expectation was the Coconut Board would be dismantled with the advent of the Jamaica Agriculture Commodities Regulatory Authority (JACRA) a position which has since been reversed by MICAF.

 

STATUTORY BODY

 

Gentles said that original thought behind JACRA was that it would take away all the regulation and the board was to evolve into a private-sector body. However, the ministry team said the Coconut Board should continue as a statutory body in order to carry out industry promotion development, research and extension and to ensure that growers have access to seedlings.

The new plan from PwC, he said, should also feature quantity surveying reports, factory designs and irrigation plans, among other elements needed for the $3 billion development plan.

In the initial document, the capital expenditure programme over seven years was broken down as $1.96 billion for property plant and equipment and $1.1 billion for crop establishment and maintenance.

It proposed acquisition or lease of 1,000 acres of land in Water Valley, St Mary, and lease an additional 5,000 acres of agricultural land from the Government of Jamaica to resuscitate and expand coconut seed gardens and nurseries to supply seedlings.

As for the special-purpose vehicle to created, the Coconut Board would be contributing equity that reflects the value of its shares in Seprod, Gentles said. The Seprod stock is currently trading at $44.14 per share, valuing the Coconut Board's stake in the company at $7.2 billion.

avia.collinder@gleanerjm.com