Eridania returns to sugar auction

Mark Titus, Business Reporter

Months after backing away from buying the remaining three sugar estates under Government's control, Italian firm, Eridania Suisse SA, has made a surprising about-face and is now among eight potential investors which submitted expressions of interest for the state assets to the Development Bank of Jamaica (DBJ) before the May 25 deadline, Financial Gleaner sources have confirmed.

Three local entities are said to have thrown their hats in the ring. They include Jamaica Producers Group, which is believed to have set its sights on the 100,000-tonne capacity Frome Sugar Estate in Westmoreland. Monymusk in Clarendon and Bernard Lodge in St Catherine are the factories and lands still in the Government's hands.

The names of the other two local potential investors were not ascertained.

Also showing interest in snatching up the entities remaining on the auction block is international sugar refiner, the United Kingdom-based Tate and Lyle, which displaced Eridania in a forward sale agreement for the supply of 100,000 tonnes of sugar from Jamaica, a deal which put US$46 million in the coffers of the Government over two years, starting with the 2010 crop.

Also said to be in the running are two North American companies, including renowned papaya farmer, Martha's Best, a firm with strong Jamaican ties, operating out of Martha Brae in Trelawny under the name Advanced Farm Technology Company. The agricultural firm also has facilities in Mexico, an Internet search has shown.

The other investing hopeful is a Chinese firm said to have strong backing from its Government.

It is this entity, the name of which not been ascertained, that is being considered by industry insiders, as being the front-runner, with some stakeholders in the sector prepared to suggest that the selection process is a mere formality.

Aubyn Hill, the chief executive of Sugar Company of Jamaica Holdings Ltd, the company that manages the remaining factories and lands, has refused to discuss who the interested parties are, but rubbished the assertion that a decision had already been taken.

"At this point, all I can tell you is that, yes, there are eight expressions of interest now before the DBJ, but would be unfair to all the parties involved for such a decision to have already been taken," Hill said this week.

"The next step will be that we have set up meetings with individual parties, they might then put in a proposal, they might ask for more information, they might ask for more time to complete their proposal," Hill said.

"There is also the vetting of proposals when they are submitted and then further assessing the assets, and we expect to have those meetings this week or the week after."

Meanwhile, speaking to the Financial Gleaner from Costa Rica this week, Jeffery Hall, the managing director of Producer's Group, the still diversifying food conglomerate, which earlier had a heavy hand in banana exports from Jamaica, all but confirmed his company's interest, even while refusing to comment on grab for the Westmoreland facility.

"We do not discuss proposed business ventures," Hall said.

"If at the end we find that it is a project we are going to pursue, we will be willing to discuss it at that time, but for now it is not a matter we are willing to talk about, especially at this early stage."

Eridania, which stakes a claim to 30 per cent of the European sugar market, is, like Tate and Lyle, seeking to establish a consortium, preferably, with Jamaican partners, and both are demanding a call on all the sugar that would be produced by the entities they would own if successful in their bid.

Industry officials told the Financial Gleaner recently that there is a pooling arrangement among all local sugar producers to meet the various supply obligations. The exclusive condition being proposed by Eridania and Tate and Lyle appear calculated to opt out of any such pooling of supplies should either bag the remaining state-owned assets.

Negotiations with Eridania Suisse faltered in an earlier round after the Italian sugar refiner completed its due diligence on the Jamaican assets and appeared to have found them lacking, after which it baulked at the price they were commanding at the time. However, predictions that the world market might soon be faced with short-term supply challenges, might explain the company's return to the bargaining table. Eridania would be still smarting too, from Tate and Lyle's willingness to better its US$15 million deal which the Switzerland-based refiner had with the Jamaican Government.

The aborted asset sale to Eridania represented the second and most recent of Jamaica's failed attempts in two years to sell the Frome, Monymusk and Bernard Lodge, followed the episode involving ethanol producer, Infinity BioEnergy of Brazil in 2008. That South American firm was unable to muster the US$125 million cash agreed for the sale of the badly performing sugar assets.

mark.titus@gleanerjm.com