Jamaica Broilers raises $500 million

Friday, September 07, 2018

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A new bond issued by Jamaica Broilers Group Ltd (JBG) has raised $500 million for the agri-business company.

Issued on August 31, the bond is set to mature on September 30, 2019 with interest rate of 5.5 per cent fixed to the maturity date. It was arranged by Sagicor Investments Jamaica Ltd.

JBG plans on using the money raised to fund working capital requirements.

In March, JBG borrowed $4.738 billion by way of a syndicated loan to refinance existing debt and to prepay $2.3 billion to bondholders. A month later, the agri-business company entered into an agreement to lend to JBGL Stockholders Nominee Ltd (“the Shareholder Trust”) a sum not exceeding $4.35 billion.

According to JBG, a portion of the loan was used to purchase a total of 165,452,446 shares held by family branches of one of the founders of the company and the trustees and entities connected to them; none of whom are currently involved in the management.

The company also managed to successfully takeover the operations of a feed mill and related assets of Crystal Farms in Georgia, USA through its subsidiary Wincorp Properties in August.

JBG recorded goodwill of $410.5 million arising from several acquisitions, representing approximately 1.3 per cent of the Group's total assets at year end 2018.

Interim results for the first quarter ended July 28, showed a six per cent decline in JBG's US operation year over year, moving from $318 million to $300 million. The company attributed the decrease to one-off staff cost elements and acquisition costs related to the recent feed mill purchase. Nonetheless, total revenue for its US operation increased by eight per cent over the prior year driven by increased sales of fertile eggs and baby chicks.

Group revenues for the first quarter amounted to $12.2 billion, a six per cent increase over the $11.5 billion achieved in the corresponding quarter of the previous year.

Salary increases and exchange movements led to a 17 per cent increase in the company's distribution and administrative costs. The agri-business company's finance income, however, moved up to $300 million from $10 million, causing net profit to near double at $413 million.

“The first quarter results also include the costs of operating the new hatchery in Pennsylvania, these costs were not in last year's results. Additionally, the costs related to the formation of the Shareholders' Trust are recorded during the quarter ended July 28, 2018,” President and Chief Executive Officer, Christopher Levy noted in a statement to shareholders.

JBG's Jamaica operations reported a strong first quarter segment result of $842 million, which was $392 million or 87 per cent above last year's segment result of $449 million, attributable to improved gross margins resulting from increased production and improved inventory management.

Meanwhile, JBG increased its market share of table eggs in Haiti to 34 per cent, compared to 30 per cent of the market at the end of the first quarter last year. The segment result for the first quarter amounted to $60 million, which is $15 million or 32 per cent above last year's segment result of $45 million. Total revenue increased by 13 per cent.

JBG's other Caribbean operations reported first quarter segment results of $847 million an increase of $772 million over the corresponding quarter of the previous year.

bennettk@jamaicaobserver. com

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