Tue | Sep 26, 2017

NCB sells Kingston Wharves stake for $3b - Seaboard Corp is now second largest shareholder behind Jamaica Producers

Published:Friday | September 26, 2014 | 9:00 AM

Jamaica Producers Group (JP) CEO Jeffrey Hall says operational control of Kingston Wharves Limited remains unchanged even as his company cements its hold on the port operation.

In a deal valued at about $3 billion, National Commercial Bank Jamaica Limited (NCB) and subsidiary NCB Capital Markets Limited have agreed to sell their combined 32.59 per cent stake in Kingston Wharves Limited to Seaboard Corporation and Jamaica Producers Group Limited.

NCB said it exited the investment under plans to divest certain non-core holdings.

Chairman and CEO of Kingston Wharves, Grantley Stephenson, also confirmed last night that no single shareholder had operational control of the port company prior to Wed-nesday's transactions, and that the status quo remains. He adds that the management team has not changed.

Seaboard, a foreign shipping company, is acquiring 21 per cent of Kingston Wharves, making it the second largest shareholder, ahead of Shipping Association of Jamaica Property Limited.

Jamaica Producers, a food and logistics conglomerate, has snapped up 11.59 per cent more of the port company, increasing its stake from 30 per cent to around 42 per cent.

Sources closely connected to the deal told the Financial Gleaner that JP paid just about J$1.05 billion for the additional shares.

The stock closed at $6.50 on Wednesday, the day to the transaction, pushing the market value of Kingston Wharves to $9.3 billion. On Tuesday the company was valued at $7.2 billion or $5.01 per share.

Seaboard's 21 per cent stake gives the shipping services company the right to name up to three directors to the board.

US$20 million project

Stephenson said the directors nominated by NCB have resigned their seats, but "we have not yet had any indication from Seaboard as to their intentions in this regard," he told the Financial Gleaner.

Seaboard's one-fifth acquisition of Kingston Wharves comes amid the rollout of a US$20 million project by the company. On whether Seaboard would contribute capital to that project said that unlike the transaction with Jamaica Producers back in 2012, in which there was an agreement for the conglomerate to invest in Kingston Wharves, Seaboard's acquisition was strictly a purchase of shares.

The proceeds would have gone to the seller. The 2012 JP transaction involved an issue of new shares by Kingston Wharves with the proceeds of the sale flowing to the port company.

Kingston Wharves is a $17 billion company by assets. Last year it handled more than 295,000 container moves and generated record revenue of more than $4 billion.

The port company operates 260,000 square metres of open storage space, 24,000 square metres of covered warehousing and cold storage, and 53,000 square metres of off-dock storage for motor vehicles. Its terminal has a 1.7 kilometre continuous quay that provides nine deep-water berths for roll on-roll off, lift on-lift off, general break bulk, containerised cargo and bulk cargo vessels.

"We think it is good for Jamaica and good for Kingston Wharves that Seaboard has decided to invest alongside JP, other shipping interests and the Jamaican public at this important moment in the development of Jamaica's logistics sector," said JP chairman Charles Johnston in a press release on the share sale.

President of Seaboard Marine Edward Gonzalez said the acquisition extends its longstanding relationship as a customer of Kingston Wharves.

BroadSpan Capital LLC acted as NCB's exclusive financial adviser on the transaction.

business@gleanerjm.com