Development Bank of Jamaica (DBJ) provided J$27 million to fund the JCGL receivership, but financial reports filed with the Companies Office of Jamaica indicate that neither this injection nor receipts from sales were enough to cover the major costs incurred ahead of the sale of citrus assets.
Over the first 19 months in which Jamaica Citrus Growers Limited (JCGL) has been in receivership — July 4, 2011 to January 31, 2013 — company sales totalled J$365.9 million, while expenses almost doubled revenue at J$644.2 million.
Were it not for advances from the eventual purchaser of the citrus assets, amounting to J$195 million, more than a third of which funded redundancy payments, the JCGL receivership would have closed January in the red. Instead, it reported a surplus of just over J$13 million.
The JCGL plant at Bog Walk and surrounding lands were sold for an undisclosed price to SM Jaleel, through the Trinidad company's local subsidiary Jamaica Beverages Limited. The total deal, which includes capital injection in the plant and a side agreement with Jamaica Citrus Growers Association to fund a seed nursery, amounted to J$1 billion.
The buyers separately reached a deal with Citrus Growers for rights to the Juciful brand.
Major outlays under the receivership were made for staff redundancy, payments to secured creditors, attorney's fees, raw material, repairs and maintenance and staff costs. Secured creditors got a payout of J$54 million, while J$7.23 million was paid out as receivership fees.
John Lee of Pricewaterhouse-Coopers was hired as the receiver.
Sales declined progressively over the period of receivership, from $237.3 million in the first six months to J$124.9 million in the second six-month block, during which SM Jaleel began taking over the operations, and eventually to J$3.7 million in the last six-month period ending January 2013.
Staff expenses and raw material expenditure were progressively cut for the company whose buyer took over operations in May 2012.
The company paid out $75.54 million in redundancy payments. Redundancy advances from the purchaser totalled J$78.6 million.
The receivers report did not outline the company's debt obligations. But, Wilfred Baghaloo, a director of PricewaterhouseCoopers Jamaica and agent to the receiver, said after the deal with SM Jaleel/Jamaica Beverages closed that the proceeds were insufficient to cover both the debts of JCGL and other obligations incurred during the period of the receivership.
Baghaloo, who is the agent of JCGL receiver John Lee, said Development Bank of Jamaica, which placed the citrus company in receivership, is likely to receive less on the dollar than the commercial banks, which are holders of secured debt.
Baghaloo said moneys were borrowed to run the company during the period of receivership. The loans taken, he said, have made a 100 per cent payout of previous and acquired debt impossible.
The receiver's filings with the Companies Office do not detail the JCGL's debts.
The disbursements from DBJ, which placed JCGL in receivership, included "advances" of J$22 million at the start of the process, and another J$5 million ahead of the sale.