MICHAEL Lee-Chin's AIC International Investments has bought Wallenford Coffee Company for US$16 million ($1.6 billion).
The deal, which will see the new owners pump an additional US$23.5 million into the factory and coffee farms over the next four years, gives AIIL access to over 5,000 acres of Blue Mountain coffee land and has the capacity to process over nine million pounds of coffee in its facilities.
Apart from the receiving the proceeds from the sale, the Government will be ridding itself of an ailing company, which accumulated losses of $2.36 billion (US$23.6 million) since 2004 and held net assets of $67.75 million as at February 28.
Wallenford suffered from limited funding over the years and the plant's processing capacity has been extensively underutilised, according to Milverton Reynolds, managing director of the Development Bank of Jamaica (DBJ), which, as the Government's privatisation agency, provided technical and administrative support to the divestment team.
"This will relieve the Government of the obligation of providing financial support to the operations," he said. "The divestment is also important for the industry as a whole, as the purchaser plans to invest in increasing the acreages under cultivation and will continue to provide extension services to coffee farmers."
AIIL assumed control of the Wallenford operations on Wednesday following the execution of a memorandum of understanding on August 29.
Closing of this transaction is expected to take place within the next six months.
The four-year development plan for Wallenford aims to make the coffee producer more efficient and profitable through the production of "the highest quality green bean products as well as innovative new value-added products", according to the DBJ.
Wallenford recently expanded into a complete line of roasted beans and ground products for the local and international consumer markets.
"The development plan also includes the resuscitation of established farms, upgrading of equipment and renovation of buildings and facilities, while increasing the acreage of coffee and extension services to coffee farmers," said a DBJ statement issued last Friday.
The divestment will mark the departure of the Government from commercial coffee operations, having previously divested the Mavis Bank Coffee Company in October 2011.
"The Government will now move to focus its efforts on regulating the industry through the Coffee Industry Board, encourage general development and expansion of the industry and the aggressively protect the Jamaica Blue Mountain Coffee brand," said the DBJ.
The DBJ had started the divestment process through advertisement, locally and overseas, between June and November 2011, during which time there were two extensions to the process.