After months of delays, the Jamaica Livestock Association (JLA) finally closed a deal that saw the firm hiving off certain of its assets that would free up funds that would put it on a firm financial footing after amassing huge liabilities.

During the three months ending May 31, 2010, the JLA reported that it earned $428 million from the gain on sale of fixed assets, which translated into a $411 million net profit.

Prior to inking the sales agreement the JLA had a working capital deficit of $284 million up to the end of August 2009 but even with the reclassification of the assets that were put up for sale the company had accumulated a deficit of $442 million.

At end May 2010, the JLA had a working capital surplus of $64 million, its retained earnings stood at negative $32 million.

Importantly it rid itself of most of the costly bank overdrafts its had accumulated – bank overdraft totaled just under $10 million at May 31, 2010 compared to $154 million a year prior – and long term debt and deferred tax liabilities that totaled $244 million a year ago, and which stood at $25 million at the end of May this year.

In April 2009, JLA CEO had told the Business Observer that his firm was looking at a rights offer of shares to raise much needed capital. Then the company viewed the rights offer as the best option due to the costly nature of loans or private equity but the company opted for the sale of some of its assets in stead.

The company’s problem stem from the rise in commodity prices especially of corn and soya beans, whilst credit conditions worsened during the depths of the economic recession.

In September, shareholders agreed to sell its feed mill, wharf, grain off-loading facilities and other assets specified in an agreement with Agro Industries Holding (2008) Limited for US$6 million.

The closing date was supposed to have been September 30, 2009 but the JLA later advised the stock exchange that the deal was delayed but that “it does not expect that the transaction will go beyond November 30, 2009”.