Business

JSE suspends Sweet River Abattoir and Supplies

Bankers issued demand notice for $116M

BY DURRANT PATE
Observer business writer

Wednesday, August 14, 2019

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THE Jamaica Stock Exchange (JSE) has suspended with immediate effect Sweet River Abattoir and Supplies (SRA) for breaches of the exchange Junior Market Board Level Requirements.

The company has been suspended for failing to have an independent non-executive on its board, as required by the rules of the JSE's Junior Market. This latest episode has added to the mounting problems being faced by the company.

Only last month its bankers, First Global, issued a demand for repayment last month of outstanding balances totalling $116 million and there was also the sudden resignation recently of a number of directors including the managing director, Valdence Gifford.

Sweet River Abattoir and Supplies Company breached the following JSE Junior Market rules:

• JSE Junior Market Rule 504 (1) (b)—Board Level Requirements— “The board of directors referred to in Rule 504 (1) shall include at least two independent non-executive directors”.

• JSE Junior Market Rule 504 (2) (b)—Board Level Requirements—The board of directors referred to in Rule 504 (1) shall … establish an Audit Committee and a Remuneration Committee that, in each case, has a majority of independent, non-executive directors as its members”.

• JSE Junior Market Rule 505 (5) —Ongoing Requirements, Board of Directors — “Each Junior Market Company shall at all times comply with the requirements for the board of directors set out in Rule 504”.

• JSE Junior Market Rule 500 (4) —High Level Principles, Board Level Requirements— “An eligible company or Junior Market Company (as the case may be) shall at all times have a board of directors that complies with the requirements set out in Rule 504”.

• JSE Junior Market Rule Appendix 4, Section (2) —Admission Agreement— “On admission, and at all times during which the company is a Junior Market Company, to comply with the provisions of Rule 505 as regards ongoing requirements, and any other requirements imposed by the JSE in its absolute discretion, from time to time”.

Due to the above breaches and the company's inability to rectify the matter promptly, the JSE was forced to suspend trading in the company's shares in accordance with JSE Junior Market Rule 505, Section 14 (a) (i).

FIRST GLOBAL DEMAND NOTICE

First Global Bank Jamaica Limited, lenders for the debt financing component of the abattoir construction, issued a demand notice on the company on July 19, 2019 through their lawyers for the repayment of the balance outstanding of $116 million on loans, citing inter alia default in making the agreed payments. The monthly loan payment, which was due on July 1, 2019, was 18 days past due as at the date of the demand notice.

The total loans acquired were $180 million. The new abattoir was valued in August 2018 at $322 million with a forced sale value of $268 million.

RESTRUCTURING PLANS

Prior to this developments, the board of SRA has been exploring plans to restructure the company's balance sheet, and to bolster its governance structure. The recent developments have necessitated the expedition of this process, which the Stock Exchange was advised.

RESIGNATIONS

Valdence Gifford resigned as the managing director of SRA effective May 31, 2019. He, however, continues to serve in that capacity on a contractual basis until a replacement is selected and he remains a member of the board of directors.

The other board resignations were Audrey Deer-Williams, who resigned as a director, effective June 7, 2019 and Robert Meghoo who resigned as a director, effective July 16, 2019.


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