PwC hunting buyer for Juciful maker

Avia Collinder, Business Reporter

The Development Bank of Jamaica (DBJ) has placed the Jamaica Citrus Growers Limited (JCG) on the market following a failed two-year effort to locate an equity partner for the indebted juice maker.

On September 5, receiver-manager PricewaterhouseCoopers Jamaica (PwC) invited offers for the purchase of JCG - that is, the business and/or its assets.

The deadline for bids is November 18, 2011.

PwC was appointed receiver in July 2011, with a notice issued in the same month, said Nadine Williams of the investment and auditing firm.

Jamaica Citrus is a subsidiary of the Jamaica Citrus Growers' Association (JCGA) engaged in processing, packaging and marketing citrus products, and the production of chilled beverages which is sold under the Juciful label.

Donovan Stanberry, permanent

secretary in the Ministry of Agriculture and Fisheries (MOAF), said Monday that the search for an equity investor in JCG lasted two years, following the appointment of an interim manager.

Records show that the companies has been facing liquidity problems from 2006 after borrowing J$50 million from the Government to purchase fruit from farmers and a further J$70 million, the following year, from the Development Bank of Jamaica. The loans are in arrears.

Attempts to ascertain the current debt to Government were not successful, with DBJ head Milverton Reynolds said to be off the island, while JCGA general manager Denis Boothe was also said to be out of office, earlier in the week.

Stanberry denied that the sale was being timed ahead of the expected fallout from the citrus greening disease, which prompted the closure and retrofitting of nurseries nationwide at midyear to mitigate impact on orchards.

"The MOAF has been working with the DBJ and the JCGA for two years. Efforts to get an equity partner have not worked. It did not materialise," said Stanberry.

Haggling over negotiations

In 2010, negotiations com-menced with an unnamed equity partner for equity of J$500 million in exchange for a share in its company. At last report, the parties were haggling over just how much of the company the J$500 million would buy the Jamaican investor, who wanted a 60 per cent controlling interest.

The Government had said it would consider additional debt financing, only if JCGA made serious efforts to restructure the business.

The DBJ has been having little luck offloading its citrus holdings. Reynolds said in early September that the latest round of tenders for Montpelier Citrus Company Limited (MCCL) came up empty, with no applicants qualifying for the status of preferred bidder.

First advertised for sale in mid-2008, plans to divest to the Coconut Industry Board and National Housing Trust fell through, forcing the bank to relist. The MCCL in 2010 had losses of J$358 million accumulated over the past five years.

MCCL was formed after DBJ acquired the assets of the failed Jamaica Orange Company Limited from National Commercial Bank in 1999.

Benefits of ownership

Potential purchasers of Jamaica Citrus Growers are being advised by PwC that the Juciful trademark is owned by the JCGA, which has an arrangement with the JCG for the payment of royalties for produce sold under the brand, the receiver noted. The property is inclusive of factory located in Bog Walk, St Catherine, on approximately seven acres of land. Adjacent to this are two additional parcels of land comprising approximately eight and a half acre with a concentrate processing plant, a chilled-juice plant, two chill rooms and three cold rooms. A natural water spring also serves the property.

The company was established in 1949 to provide an outlet for citrus farmers to sell their surplus fruit which fruit is processed into frozen concentrate citrus juices that are sold on the local and international markets and also used by the company in the manufacturing of its own chilled beverage products.

The company's capacity for processing citrus fruit is approximately 60,000 field boxes per week - a box of orange or ortanique contains 90 pounds of fruit and a box of grapefruit 80 pounds of fruit - the company's website notes.

The Ministry of Agriculture had commissioned a management audit and business plan in February 2008, which indicated that the factory has been operating at a capacity of less than 25 per cent for many years, resulting in underutilisation of assets.

The business plan further outlines that the modernisation of the Citrus Growers' Association and its subsidiaries would require approximately J$793 million in capital investment.

JCGA's ownership in Jamaica Citrus Growers Limited is held by an entity called Citrus Growers' Associate Limited, which has 3,274,986 shares of a total 3.275 million shares in issue, according to Companies Office records.

Another 14 million shares are held by 14 individuals.

Some 5,200 registered growers operate under the aegis of the JCGA, representing the majority of citrus farmers.

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