Dennise Williams, Staff Reporter
CHIN LOY AND SINGH
THE PROFITABLE local operation, Courts Jamaica Ltd. was asked to take over its parent company debts, reliable sources told Wednesday Business. The Jamaican board of directors, however, flatly deny this.
When contacted by Wednesday Business, managing director
of Courts Jamaica, Hyden Singh, stated, "I am not able to comment." Mr. Singh referred Wednesday Business to the U.K.-based administrators, KPMG Corporate Recovery. According to Rachael Morgan of KPMG Corporate Communications, "There is no 'U.K. debt' being passed onto Courts Jamaica. All debt would have to be agreed by
the local board as it is a listed
company."
SPECULATION
Alternatively, there is speculation that Grace, Kennedy and Company (Grace) Limited could take over the operations of Courts Jamaica. But chief financial officer of Grace, Don Wehby, flatly denied this rumour: "Not true, definitely not true. We are not in discussions with anybody about Courts," he told Wednesday Business.
Mr. Wehby believes that the combination of Grace and Courts is something that outside individuals are pushing for: "We have made it public that our key strategy driver is retail, especially with the merger of the Hardware & Lumber/True Value and Rapid Sheffield hardware stores. And Courts is the largest furniture retailer in Jamaica and so perhaps someone is trying to make a connection."
GREAT EXPECTATIONS
United Kingdom parent company of Courts Jamaica buckled under several years of losses from its U.K. operations. Court-appointed administrators have stepped in. This has created some doubt about the local operations of the company as investors had great expectations of a new share listing through a reorganised corporate structure.
And so speculation as to the impact of the parent company's financial woes on Courts Jamaica abounds.
Investment adviser at Mayberry Investments, Christopher Chin Loy, looks at the Courts situation from another perspective: "The new
owners of Courts U.K. have liquidated properties in the U.K. and are looking to recoup funds used to buy Courts and could sell shares that are held in any of their listed subsidiaries throughout the world, of which Jamaica is one of, if not the most profitable of them all." Despite this, Mr. Chin Loy is of the belief that Courts Group International, the 79.86 per cent majority shareholder of Courts Jamaica would be best served by keeping the, "status quo."
On November 30, 2004, the U.K. High Court appointed administrators to manage Courts Plc and Courts (U.K.) Limited. Founded in 1850, the furniture retailer grew to 350 stores in 20 countries.
While some 60 per cent of
revenue is earned outside of the U.K., the company had 88 furniture stores in England and Wales.
INCREASING COMPETITION
However, the UK operations experienced losses for three years and were unable to complete plans for a corporate restructuring. In
previously published reports, the administrator stated, "Courts has
suffered from an increasingly
competitive U.K. marketplace and tight margins." According to a press released issued by KPMG Corporate Communications: "As at November 29, all U.K. stores have been closed to allow the administrators time to undertake a stock value. The aim is to re-open the stores as soon as practical."
Despite the problems of its parent company, the overseas Courts stores continue to operate with their own boards, management, suppliers and funding.
