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NO DEAL!
Gov't halts sugar divestment talks with Brazilian firm
PATRICK FOSTER, Observer writer fosterp@jamaicaobserver.com
Saturday, January 31, 2009
The Government yesterday said it has cancelled negotiations with Brazilian firm Infinity Bio-Energy for the sale of the state-owned Sugar Company of Jamaica (SCJ) and the Petrojam ethanol plant in Kingston after months of talks that kept thousands of workers in the sugar industry on edge.
Prime Minister Bruce Golding yesterday told journalists that the deal was brought to a halt after the Brazilian company proved unable to adequately fund the cost of the divestment.
Prime Minister Bruce Golding telling journalists at a news conference at Jamaica House yesterday that the Government has called a halt to sugar industry divestment talks with Brazilian firm Infinity Bio-Energy. At centre is Agriculture Minister Christopher Tufton, while at right is Donovan Stanberry, permanent secretary in the Ministry of Agriculture. (Photo: Bryan Cummings)
"Our negotiating partners have not been able to secure the investor support that is required in order to deal with the obligations of this agreement," Golding said at a press conference at Jamaica House.
He added that the Government, despite the disappointment, was, however, committed to exiting the sugar industry in the face of continuing losses by the SCJ.
"What we are not prepared to do is contemplate an industry that will continue to suffer the amount of losses it always has," Golding said.
The prime minister noted that Infinity, the only company that responded to the Government tender for the SCJ divestment, was seeking equity investment on the world market rather than loan financing for capitalising the deal. But given the prevailing global economic climate, the Brazilians were experiencing difficulty sourcing the funds.
Under the sale arrangement Infinity would be required to inject approximately US$25 million on day one to acquire the state-owned sugar assets.
"They have not, up to now, been able to present to us evidence of the funding that is required," Golding said, adding that the Government made every effort to accommodate the Brazilians.
When the sugar divestment deal was first announced last year, a September 30 date was given for its conclusion. However, delays in the negotiation moved the final date to December 31 after which either party could withdraw without penalties.
Yesterday, Golding said that the heads of agreement allowed a further extension to January 31, which obviously could not be met by Infinity. "We cannot consummate the deal by then," Golding said. "After tomorrow (today) we will be free to look at all options for the management and future of the industry."
Golding, however left an open door for further negotiations with Infinity if their fortunes changed.
"This does not mean we are closing the door on concluding a deal with Infinity," he remarked. "If Infinity's investors are prepared to come to the table to demonstrate their commitment to what has been negotiated, we will be prepared to continue."
"We will be under no obligation to confine ourselves to the negotiation framework we had with Infinity," he added.
Gov't halts sugar divestment talks with Brazilian firm
PATRICK FOSTER, Observer writer fosterp@jamaicaobserver.com
Saturday, January 31, 2009
The Government yesterday said it has cancelled negotiations with Brazilian firm Infinity Bio-Energy for the sale of the state-owned Sugar Company of Jamaica (SCJ) and the Petrojam ethanol plant in Kingston after months of talks that kept thousands of workers in the sugar industry on edge.
Prime Minister Bruce Golding yesterday told journalists that the deal was brought to a halt after the Brazilian company proved unable to adequately fund the cost of the divestment.
Prime Minister Bruce Golding telling journalists at a news conference at Jamaica House yesterday that the Government has called a halt to sugar industry divestment talks with Brazilian firm Infinity Bio-Energy. At centre is Agriculture Minister Christopher Tufton, while at right is Donovan Stanberry, permanent secretary in the Ministry of Agriculture. (Photo: Bryan Cummings)"Our negotiating partners have not been able to secure the investor support that is required in order to deal with the obligations of this agreement," Golding said at a press conference at Jamaica House.
He added that the Government, despite the disappointment, was, however, committed to exiting the sugar industry in the face of continuing losses by the SCJ.
"What we are not prepared to do is contemplate an industry that will continue to suffer the amount of losses it always has," Golding said.
The prime minister noted that Infinity, the only company that responded to the Government tender for the SCJ divestment, was seeking equity investment on the world market rather than loan financing for capitalising the deal. But given the prevailing global economic climate, the Brazilians were experiencing difficulty sourcing the funds.
Under the sale arrangement Infinity would be required to inject approximately US$25 million on day one to acquire the state-owned sugar assets.
"They have not, up to now, been able to present to us evidence of the funding that is required," Golding said, adding that the Government made every effort to accommodate the Brazilians.
When the sugar divestment deal was first announced last year, a September 30 date was given for its conclusion. However, delays in the negotiation moved the final date to December 31 after which either party could withdraw without penalties.
Yesterday, Golding said that the heads of agreement allowed a further extension to January 31, which obviously could not be met by Infinity. "We cannot consummate the deal by then," Golding said. "After tomorrow (today) we will be free to look at all options for the management and future of the industry."
Golding, however left an open door for further negotiations with Infinity if their fortunes changed.
"This does not mean we are closing the door on concluding a deal with Infinity," he remarked. "If Infinity's investors are prepared to come to the table to demonstrate their commitment to what has been negotiated, we will be prepared to continue."
"We will be under no obligation to confine ourselves to the negotiation framework we had with Infinity," he added.
