Jamaican Teas Group has sold its interest in the recently acquired KIW International Ltd for just over $200 million.

The development follows deliberations by Jamaican Teas on whether to upgrade and develop KIW International for merger with the group’s real estate arm H Mahfood & Sons and later spin off as a separate entity, or to sell KIW and transform the arm into an investment company.

In deciding on the latter, Group CEO John Mahfood told the Jamaica Observer that the company is looking to invest funds from the transaction into the stock market. It’s not clear when the property was sold and who was its purchaser; however, in April, Chairman John Jackson noted that there was an expression of interest for purchase of the property.

“We haven’t received the funds from the sale, but…in the short term we are looking to invest that in the stock market and other investments,” Mahfood said.

He added that Jamaican Teas is still in deliberations about the future direction of the business, specifically relating to whether it will be a company that invests in stocks or to include other investments such as real estate.

“We will certainly have to get more capital, but at this point we are in the middle of looking at the future of that business as well as H Mahfood and Sons and seeing how best to operate the group. Will it be that Jamaican Teas stands alone and those investments are spun off? We haven’t made that final decision yet,” Mahfood reasoned.

In its recently released third-quarter final results, the CEO noted that the investment company will be taking advantage of opportunities locally and overseas.

KIW International, formerly Kingston Industrial Works Ltd, was formed in 1908 to provide industrial repair services to the sugar estates. The property, located at 138 Spanish Town Road in Kingston, held over 2000 shareholders and had its main income generated from rental of factory and warehouse space.

According to data provided by the Development Bank of Jamaica (DBJ), the Jamaican Government in August 1978 acquired 6.8 million ordinary shares or 42.6 per cent of KIW International, as well as 14 million cumulative redeemable preference shares.

Through DBJ the KIW stake — comprising 42.6 per cent ordinary shares and 100 per cent of the preference shares — was sold for $57 million. Jamaican Teas paid down $10 million at signing and finalised payment in April.

“The good thing is that we have $200 million from that project at KIW and another $200 million coming in from the sale of units in our real estate development in St Thomas. So between the two we will have just over $400 million available for investment,” Mahfood told the Business Observer.

The company is now looking to reinvest half of the available funds into real estate developments on Red Hills Road and another in the vicinity of Barbican — both in St Andrew.

“These are relatively small developments, because at this stage we don’t have the financial resources to fund large real estate projects. So we are doing one at a time and trying to keep them relatively modest in terms of total capital outlay,” he said.

Shareholders are expected to be further informed about the two developments before the end of the year.

Jamaican Teas reported a 45 per cent increase in export sales which drove up revenue to $421 million for the third quarter ending June 2017. It’s an increase of more than $100 million comparable to Jamaican Teas 2015/2016 third quarter, with the group enjoying profit after tax of $63.6 million compared to $26.7 million year over year.

Profit included gains of approximately $30 million from Jamaican Teas acquisition in KIW International in April.

— Karena Bennett