DBJ hires PwC as adviser on sale of Wallenford
Published:Friday | March 4, 2011 | 12:00 AM
Coffee assets valued at US$36m
Avia Collinder, Business Reporter
The Development Bank of Jamaica (DBJ) said Thursday that it will be putting Wallenford on the market by this month-end and has contracted PricewaterhouseCoopers (PwC) to guide the sale of the debt-ridden company.
The coffee company, the bank said, now has US$36 million (J$3.09b) of assets, some of which are fixed assets that were acquired in the past two years while the bank and the Ministry of Agriculture positioned Wallenford for sale.
"The opportunity has arisen for the acquisition of the assets and operations of the Wallenford Coffee Company Limited which is expected to be publicly advertised by the end of March 2011," said the preliminary information guide released by the bank.
The company's assets comprise farmlands, factories, pulpery, roasting and packaging plant, other buildings and trademarks, which will "be bundled into several packages".
Bids can be placed on one, some or all of the packages, the bank said.
The coffee company owns more than 2,430 acres of land, of which 405 acres are under coffee cultivation. It operates factory and processing facilities, several farms in the Blue Mountain region, a pulpery, property located on Marcus Garvey Drive in Kingston, and the Wallenford brand itself.
PricewaterhouseCoopers, the guide adds, will act as exclusive financial adviser on the divestment of the assets and operations, and the point of contact for prospective bidders.
Wallenford was formed in 2004 as a spin-off of the commercial operations of the Coffee Industry Board.
At the point of formation, the company was undercapitalised, and has suffered consistent net losses since 2005, except for a J$7.24 million surplus in fiscal year 2009-10.
The losses have accumulated to the point where Wallenford now sports negative equity of J$1 billion. Its capital and reserves of J$438 million have been overcome by J$1.5 billion of accumulated deficits.
The DBJ and Ministry of Agriculture and Fisheries have spent the last two years adding government-owned properties to Wallenford's balance sheet. And, the Coffee Board has been borrowing money on its behalf to provide cash for bean purchases as Wallenford, like other dealers in the industry, has been affected by price cuts forced on Jamaican manufacturers by green bean buyers.
Donovan Stanberry, the permanent secretary in the agriculture ministry, told the Financial Gleaner that properties transferred to Wallenford, including the Torrington coffee-processing facility in Clarendon, have given the company a more healthy balance sheet, reflecting assets in excess of liabilities.
Stanberry suggested that Wallenford's sale might follow the divestment model used for sugar, under which outstanding statutory payments, redundancy costs and debt finance charges were expunged or assumed by Government.
"Investors were simply asked to invest in and develop the properties," he said.
DBJ confirmed that Wallenford's assets now exceed its debts, but would not disclose the current state of the company's capital base.
Previously published data, however, put the company's liabilities at J$1.86 billion in 2010, inclusive of J$1.64 billion of long-term debt.
"It would be premature to speak of the specific debt position of the company at this time," said DBJ, in response to Financial Gleaner queries.
The largest and one of the best known producers of the world famous Blue Mountain coffee brand, Wallenford is the largest local exporter of Blue Mountain and High Mountain coffee, of which the main consumer is the Japanese.
It also does trades with Australia, Korea, China, Singapore, United States, Canada, United Kingdom, Italy, France, Spain, Germany, Belgium, Sweden, Denmark, Norway, Netherlands, Luxemburg, Switzerland and, more recently, Russia and Poland.
DBJ's preliminary information guide states that Wallenford's annual operating revenues for the last six years averaged US$8.7 million.