The Jamaica Broilers Group (JB) announced yesterday that it had entered into an agreement with West Indies Petroleum Limited for the sale of subsidiary JB Terminal Ltd at Port Esquivel (formerly JB Ethanol Ltd) and its shares in ERI Services Ltd (St Lucia) for cash of US$4 million ($505 million) and assumed liabilities of US$18.5 million ($2.4 billion) due to Jamaica Broilers Group Ltd.

ERI Services Ltd is the holding company for JB Ethanol, now JB Terminal (Port Esquivel) Ltd.

The transaction is expected to be completed during the first quarter of the company’s financial year, JB said.

Alongside a 120 million-gallon plant, JB Ethanol also managed a 25 million-gallon storage facility at Port Esquivel, St Catherine.

Ian Parsard, Senior Vice President of Finance at JB, told the Jamaica Observer on Wednesday that the liabilities owed by the companies being sold will be transferred as debts owed.

“They will now be treated as external debt to be paid by the new owner.” He said that the terms of payment were confidential.

Buyer West Indies Petroleum is a ship bunkering company based in Kingston.

The planned sale brings to a close a project eight years old which ended in losses for JB, whose core business is poultry rearing. JB Ethanol produced fuel-grade ethanol from wet ethanol sourced from Brazil, but increasingly less so over time.

“Shifts in market forces mitigated against the fulfilment of previously established tolling contracts and challenged the processing of ethanol for the overseas market,” JB explained in its annual report.

Previously, under the Caribbean Basin Initiative (CBI), the country had duty-free access to the United States market, while countries like Brazil were subject to tariff. The situation changed in 2012 when the US did not renew the ethanol tariff on non-CBI countries.

The dehydration plant operated through subsidiary JB Ethanol Ltd has largely been idle for two or more years when tolling contracts lessened.

JB’s 2014/15 report commented,“The ethanol dehydration model has been challenged as a result of inconsistent and erratic global trends in ethanol production and trade.”

It noted, however, that the facility had attracted significant attention as a fuel terminal, with an organisation leasing the facility as a bulk liquid fuel terminal for several months during the year.

In preparation for third party management or new ownership, JB executed a change in the name of the company.

Parsard told the

Caribbean Business Report that the availability of cash from the sale, if and when the deal is concluded, will allow JB to continue to focus on its strategic plan.

“What it does is allow a full alignment with the strategic plan which focuses on our integrated poultry business.” JB, he said, is working on growing its poultry operations in Jamaica, the United States and Haiti.

Speaking at the signing ceremony, Charles Chambers, Director of West Indies Petroleum Ltd described the sale as “a tremendous transaction between his company, the Jamaica Broilers Group, UC Rusal and Windalco,” according to a news release. He said the negotiations were held over an extended period, but the acquisition was the right fit for his company to be one of the main players in bunkering in Jamaica, the region and internationally.

Chambers said currently West Indies Petroleum Limited fuels cruise ships which call at the ports on the north coast. However, the current acquisition will allow for the refuelling of larger cruise liners such as Carnival and Royal Caribbean, as well as large container ships such as Zim.

Minister of Science, Energy and Technology, Dr Andrew Wheatley, who participated in the signing, endorsed the divestment, pointing out that it will broaden the reach of the Jamaican refuelling company, especially with the opening of the upgraded Panama Canal.