Jamaica Producers Group sells most of its 32% stake in SAJE Logistics associated company

Jamaica Producers Group sells most of its 32% stake in SAJE Logistics associated company

$1.9-billion sale comes amid COVID-19 restructuring exercise

BY DURRANT PATE
Observer Business Writer

Friday, September 25, 2020

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Jamaican conglomerate, Jamaica Producers Group (JPG), has offloaded most of its 32 per cent shareholding in its related real estate and property management company, SAJE Logistics Infrastructure Limited.

JPG has entered into an agreement selling 22.1 per cent of its equity in SAJE, which is primarily involved in land and investment holdings in the Newport West area of Kingston and forms part of JPG's Logistics and Infrastructure Division. The name of the buyer has not been disclosed.

SAJE, formerly the Shipping Association of Jamaica Property Limited, has been investing in real estate for well over 30 years.

JPG announced on Tuesday last in a regulatory filing with the Jamaica Stock Exchange (JSE), where its shares are traded, that it is expected to fetch $1.9 billion from the sale.

JPG said it will use the proceeds of sale to continue to invest in its food, drink and logistics and infrastructure businesses. The Jamaican conglomerate also announced that its interest in SAJE, which is held indirectly through a subsidiary, has in turn been sold to SAJE and/or its nominees.

JPG will retain a 9.5 per cent interest in SAJE through its subsidiary, Kingston Wharves Limited. In line with the positive performance of SAJE during the time in which JPG held an interest, JPG is expected to report a material gain on sale in its upcoming third quarter financial statements.

JPG has emphasised that prior to the sale, SAJE was recognised as an associated company of the group, and based on the company records was part of its Logistics and Infrastructure Division, which includes businesses focused on logistics, transportation, port operations and other infrastructure investments.

JPG POST-COVID RESTRUCTURING

The sale comes just a month after JPG chairman, Charles Johnston, disclosed to shareholders that the group is restructuring its operations in response to challenges brought on by novel coronavirus.

In his foreword, accompanying JPG's second-quarter results for the period ended June 2020, Johnston told shareholders, “During the second quarter we took definite steps to restructure and reduce our cost base and at the same time develop new sales channels, particularly for those segments of our business that were most dependent on travel retail and hospitality.”

According to Johnston, “We are responding to these challenges by implementing a series of measures and technological solutions to better facilitate the clearing and handling of cargo under the current conditions. We have also taken steps to reduce costs and maintain our strong competitive position in the market for the services we offer.”

Over the medium term, JPG will further strengthen the business by improving specialised capability to handle a wider range of cargo types, which has led to business growth in the past and this is expected to continue.

SAJE PERFORMANCE

SAJE has continued to invest in its property portfolio over the 2018-/2019 financial year through the addition of several new properties, and has managed to reduce some of its equity holdings to expand its property holdings. This year, the company is expecting to continue to look for properties that could deliver good rental yields and present opportunities for long-term expansion and investment.

Last year focus was placed on SAJE increasing rental yields and property earnings whilst managing its investment portfolio of equity stocks.


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