Government-owned Wallenford Coffee Company (WCC) has been divested to AIC International Investments Limited (AIIL) in a deal worth US$39.5 million (J$4 billion), the Development Bank of Jamaica (DBJ) announced last Friday.
AIIL is a wholly owned subsidiary of Portland Holdings Inc. Both are owned by Michael Lee-Chin.
Cabinet approved the sale of Wallenford to Lee-Chin in April, but DBJ said, at the time, that there were still sensitive issues to be discussed before a final deal could be reached.
DBJ said in a release last Friday that the deal will see the payment of some US$16 million (J$1.6 billion) to the Jamaican Government, with the purchaser to inject an additional US$23.5 million (J$2.35 billion) in the development and expansion of Wallenford over the next four years.
"I look forward to doing my part to ensure that the Jamaica Blue Mountain brand, Jamaican coffee in general and, most importantly, Jamaica's hard-working coffee farmers receive maximum financial benefit from proper stewardship of our uniquely Jamaican, yet globally recognised coffee," Lee-Chin said in the release.
AIIL assumed control of the Wallenford operations on September 11, 2013. The transaction is expected to close within the next six months, the bank said.
The coffee company had accumulated losses of J$2.36 and net assets of J$67.75 million up to February.
Wallenford is Jamaica's largest coffee estate and largest processor of green beans originating from the Blue Mountain and high mountain regions.
The DBJ said Friday that the owner of the 250-year-old Wallenford brand has access to over 5,000 acres of Blue Mountain coffee land and has the capacity to process over nine million pounds of coffee in its facilities.
DBJ managing director, Milverton Reynolds, said a memorandum of understanding with AIIL was signed on August 29, 2013.
"The objective of AIIL's four-year development plan is to establish the WCC as an efficient and profitable coffee- company-producing the highest quality green bean products as well as innovative new value added products," said Reynolds.
"In support of this objective, the purchasers will focus on improving the quality of green beans and strengthening the Wallenford brand by diversifying the product offerings in existing and new markets. The development plan also includes the resuscitation of established farms, upgrading of equipment and renovation of buildings and facilities, while increasing the acreage of coffee and extension services to coffee farmers."
The divestment of the WCC marks the Jamaican Government's exit from commercial coffee operations, the DBJ said.
"The Government will now move to focus its efforts on regulating the industry through the Coffee Industry Board, encourage general development and expansion of the industry and aggressively protect the Jamaica Blue Mountain Coffee brand," the bank said.