Sun | Aug 20, 2017

Sugar company wants its US$1m - Everglades seeks to settle demand through mediation

Published:Sunday | May 14, 2017 | 5:00 AMMark Titus
Andrew Hussey
The Everglades-controlled Long Pond Sugar Factory.
1
2

Efforts are now under

way to settle a dispute over a reported debt of just over US$1 million which the Sugar Company of Jamaica (SCJ) Holdings is seeking to collect from the owners of Everglades Farms Limited.

The Sunday Gleaner has confirmed that SCJ Holdings has written Everglades, the owners of the Long Pond and Hampden sugar estates in Trelawny, demanding US$1.045 million, which it says is owed for lands leased under the divestment deal with the Government in 2009.

But CEO of Everglades Andrew Hussey has expressed confidence that the issue can be resolved through mediation.

"Each party has items in dispute and both parties have agreed to mediation to resolve these items," Hussey told The Sunday Gleaner.

"We are confident that these matters will be resolved once mediation is concluded," added Hussey.

A government source had reported that a demand letter was served on the company at the instruction of the board of SCJ Holdings, and if Everglades fails to comply a notice to leave the lands could follow.

"The amount owing to SCJ, I can safely say, is over US$1 million, but there is a dispute over charges for the use of their facility and equipment at Long Pond, last year (and) that has become a vexed issue between both parties," said the source.

In a letter addressed to the company, chief financial officer of SCJ Holdings Sherry-Ann Johnson-Hylton acknowledged owing a balance of just over $4 million to Everglades pertaining to "the Long Pond Project".

The document revealed that Government paid $4 million to lease the facility, while a fee was also charged for the use of factory equipment.

It also outlined items of contention to be dealt with, which includes, among other things, security costs post-October 2012, housing costs post-February 2014, modification of grease trap and technical consultancy conducted by Outram Hussey for an environmental study.

The Hussey family acquired Long Pond in a package that included Hampden Estates, which is also located in Trelawny, for $135.5 million in 2009.

Under the deal, the new owners were required to maintain 60 per cent of the leased lands for sugar-cane production or related products for 15 years.

The deal covered the two factories and 40 hectares of land they are surrounded by, plus an additional 7,100 hectares, leased for US$40 per hectare per annum for the first 10 years of the agreement.

The business plan also looked beyond sugar production, with tourism a key part of its focus. This included a rum museum for Hampden, a sugar cane museum for Clark's Town, and tours of the great houses and sugar cane mills. The plan also had scope for the breeding of horses on the properties.

However, Everglades was faced with numerous challenges in the period immediately following the acquisition and the operators opted to sit out the 2010-2011 crop year.

 

MOST IMPROVED

 

A reported $2-billion refurbishing exercise followed, and by 2012-2013, Long Pond was voted the most improved factory by the Jamaica Association of Sugar Technologists.

Long Pond's production subsequently peaked at 11,103 tonnes of sugar from 132,981 tonnes of cane in 2014-2015, but followed up with a dismal 3,027 tonnes of the sweetener from 66,421 tonnes the following year.

This led to the decision to shutter operations for the 2016-2017 crop, which Everglades blamed mainly on falling yields from growers and a substantial reduction in world sugar prices.

The Government subsequently stepped in at Long Pond, spending just over $174 million to repair and reopen the facility to harvest some 95,000 tonnes of cane.

Since then, Everglades has announced an agreement with the US firm Arrakis-Everglades Power Limited (AEP) to build a 14.20 mw biomass-to-energy cogeneration plant to produce electric power and steam energy at the site of the sugar factory.

In a media release, AEP said the deal had the potential to employ more than 900 workers and would see the transformation of the facility from one

that strictly processes sugar cane to producing electric power and steam generation.

mark.titus@gleanerjm.com