Wallenford divestment awaits House approval
THE EDITOR, Sir:
Re: Editorial re Divestment of Wallenford Coffee Company
We write with reference to your editorial 'The slow route to divestment' published in the Monday, September 1 edition of The Gleaner and wish to provide you with the information necessary to clarify the 'misapprehension' and 'astonishment' you may have been experiencing in the matter of the divestment of the Wallenford Coffee Company.
The facts are that on August 29, 2013, the Government of Jamaica (GOJ) executed a memorandum of understanding (MOU) with AIC International Investments Limited for the purchase of the Wallenford Coffee Company Limited. This MOU facilitated the preferred bidder assuming responsibility for the operations of the company and making the necessary investments to improve coffee production.
While the MOU substantively articulated the terms and conditions between the parties, subsequent to transferring control of the company, several conditions had to be satisfied by both parties to facilitate closing of the transaction. It was therefore agreed by both parties that some time was required to satisfy all the conditions necessary for the closing of the transaction.
The parties required independent verification of aspects of the company's balance sheet/working capital as at possession. In addition, it became necessary for the parties to address restructuring of the operations prior to closing.
DEBT-FREE BEFORE CLOSING
A major condition of closing is confirmation that all debts of Wallenford Coffee Company have been assumed by the GOJ to ensure that the company is transferred debt free to the purchaser. The GOJ could not have absorbed this debt in August 2013 and it had to be deferred to the 2014-15 financial year. The assumption of this debt requires parliamentary approval, which we expect to receive in September 2014. This process also involved negotiations with each major creditor and drafting of legal agreements, which can only be executed upon receipt of parliamentary approval.
The privatisation process, inherently, is one which has to be consultative to ensure that checks and balances are in place to safeguard the integrity of the transaction. The Development Bank of Jamaica and the Ministry of Agriculture and Fisheries work along with other key government stakeholders, including the Ministry of Finance and Planning, the Attorney General's Chambers and Cabinet, to ensure the transaction is concluded to the satisfaction of the GOJ.
Striking that optimal balance between concluding transactions with speed while maintaining the integrity of the process is a real challenge that government agencies face in the privatisation process.
You will also appreciate the necessity of both parties receiving sound legal oversight in relation to the vetting of the final agreements to ensure that interests are protected in such an arrangement.
We are disheartened by the speed with which The Gleaner has attributed the length of time for closing the programme to recalcitrance on the part of the civil service or a lack of seriousness on our part to the importance of private investment.
The Ministry of Agriculture and Fisheries, and indeed the GOJ, can also reassure you and your readers that we have been, and will remain, committed to facilitating private-sector investment to develop the agricultural sector and the economy. This is evidenced by the fact that we have successfully divested the sugar factories, are in the process of divesting the assets of the coffee industry, and are far advanced with the divestment of the commercial assets of the Cocoa Industry Board - all of this in the last six years.
Ministry of Agriculture and Fisheries