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Spirits conglomerate expects better results from sugar

Published:Wednesday | March 14, 2012 | 12:00 AM

Conglomerate Lascelles deMercado & Company anticipates a profitable year void of takeover challenges, after fighting off a hostile bid in court from Black Sand Acqusition Inc.

In a prompt 30-minute annual general meeting on Monday, the directors outlined growth prospects to a dozen shareholders.

"The first-quarter results for the business was disappointing. But in general terms the expectation is that for the remaining nine months we will see that position recover. So our overall trading we see as reasonably healthy year on year," said Lascelles managing director Fraser Thornton.

The conglomerate recorded a 12 per cent reduction in net profit for its December 2011 first quarter at J$722.9 million.

The group expects better results arising from improvements in market conditions, particularly in its sugar segment.

"Harvesting is going well ... and the sugar factory is producing in line with estimates which are slightly ahead of last year's position. Also, the movement of the sugar prices year on year will augur well for the financial position," Thornton said.

The Appleton Factory produced 31,300 tonnes of sugar last year, reflecting seven per cent improvement in output. Sugar earnings are counted with that of liquor, rum and wines, which together earned revenue of J$17.3 billion and operating profit of J$1.5 billion.

Unexpected challenge

Lascelles company secretary Jane George told shareholders that the group did not expect a fresh challenge from Black Sand, which sought to acquire Lascelles last year.

"We have not been notified of any further offers from Black Sand or of their intention. So we know as much as we do," she said.

Black Sand, a group of investors led by former Lascelles managing director William McConnell, bid for not less than 90 per cent of Lascelles' ordinary shares and 100 per cent of the two preference stocks.

Lascelles directors argued that Black Sand's offer was non-compliant and lacked evidence of funding. The Financial Services Commission (FSC) initially agreed with Lascelles, but changed its position following the revision of Black Sand's offer. Lascelles, however, has since maintained its position and has taken the FSC to court.

Last December, a Jamaican high court judge essentially agreed that Black Sand lacked evidence of funding.

Lascelles chairman Gerald Yetming wrote in the annual report and accounts distributed at the AGM that the group felt vindicated by the decision of the court, declaring that "the offer did not comply and must be withdrawn".

The court, however, will shortly hear arguments on whether Black Sand and its officers, directors and agents are precluded from making an offer for the shares in Lascelles for 12 months after McConnell ceased to be associated with the group.

Black Sand previously said it received equity commitments from a group of investors led by United States-based Octavian Special Master Fund LP and Kingston-based Pan-Jamaican Investment Trust totalling roughly US$370 million (J$31.9 billion), which amounts to approximately half the price paid to acquire Lascelles by the Trinidad-based CL Financial Group three years ago.