Mavis Bank Coffee Factory to be sold

Joint-venture partners Pan-Jamaican Investment Trust and Jamaica Producers Group are selling Mavis Bank Coffee Factory, the owner of the Jablum brand and prime trader of Blue Mountain Coffee, in a deal with an entity said to be affiliated with Michael Lee-Chin.

Different sources confirmed the deal, which was described as an acquisition of shares, but the parties to the transaction were tight-lipped last night. Pan-Jamaican and Jamaica Producers, both listed companies, are expected to disclose the transaction to the Jamaica Stock Exchange. It's unclear when the deal is expected to close. The takeover price

was disclosed.

Lee-Chin is already invested in the coffee sector through AIC International, which acquired Wallenford Coffee Company in 2013. However, well-placed sources said last night that the Mavis Bank acquisition will not necessarily result in a merger of Mavis Bank and Wallenford, neither was Wallenford a party to the acquisition.

BIG PLAYERS

There are three big players in the coffee sector Wallenford, the oldest; Mavis Bank, the sector's traditional largest exporter; and Coffee Traders Limited led by brothers Richard and Jason Sharp, which outperformed Mavis Bank for the first time last year as top exporter.

Sources close to the deal said the acquisition made sense as Wallenford and Mavis Bank were at the stage where they both needed critical mass to grow. So it was either seek out acquisitions or be acquired, said one source.

"I think if you look at the production record, the combined total of Wallenford and Mavis Bank would be less than 50 per cent of the industry I do not think it is dominance," said another industry source regarding implications for the market. "It is large, but will bring synergies and stability to the industry," the person said.

COMMERCIAL CAPACITY

Lee-Chin's Portland Holdings, through subsidiary company AIC International Investments Limited, acquired Wallenford in a deal valued at just over $4 billion in 2013 from the Jamaican Government.

Pan-Jam and Jamaica Producers also bought Mavis Bank from the Jamaican Government in 2011. At the time, the Development Bank of Jamaica said it would net US$4.5 million from the sale of the assets and that the Jamaica Producers/Pan-Jam joint venture would sink another US$4.5 million of capital into the business under a five-year development plan agreed by the parties to improve MBCF's physical plant and commercial capacity.

Requests for comment were declined by Managing Director of Jamaica Producers, Jeffrey Hall, Pan-Jam Chairman and CEO Stephen Facey, and chief executive at Wallenford, Mark McIntosh.

Mavis Bank Coffee Factory Limited earned $1.1 billion in revenues in 2015, and reported net assets of assets of $171 million. Additionally, the coffee company earned $100 million in net profit.

Last year, Jamaica Producers and Pan-Jam each valued their 50 per cent stake in Mavis Bank at $245 million.

steven.jackson@gleanerjm.com