JP books $11b gain on merger
August 23, 2023
Jamaica Producers Group booked one-off profit of $11.4 billion for the June quarter, nearly all of which was due to the gain it made from the sale of its subsidiaries to Pan Jamaica Group.
The near century-old company, which was once a banana trader, has once again transitioned from being a food and logistics conglomerate to an investment holding company.
Jamaica Producers described the performance as record-beating’, although most of the profit came from the gain on disposal of operational assets which totalled $11.09 billion.
Under the deal, JP sold its operations to Pan Jamaica and became the latter company’s largest owner in return. Consequently, its revenue for the quarter amounted to just $28.4 million, compared to $7.48 billion a year earlier.
“Pan Jamaica Group is now an associated company of JP, and JP’s associated company interest in PJG is now JP’s single largest asset,” JP affirmed in its earning report.
In addition to its interest in Pan Jamaica, JP holds a treasury portfolio as well as land and property assets. The treasury portfolio primarily comprises fixed-income financial securities, while the property assets primarily include farmland and commercial holdings that are currently under lease.
“JP will seek to enhance the value of these property assets over time by developing them further and by diversifying the tenant base,” said the company, which continues to be led by Jeffrey Hall as managing director.
The group holds $31.4 billion in equity, but that falls to $18.4 billion once non-controlling interests are discounted.
On JP’s books, the merger resulted in a swap of $29 billion in long-term assets with $30 billion of interest in associates and joint ventures. Its current assets were slashed to $1.5 billion from $16 billion that was held mostly as repos and cash.
In turn, Pan Jamaica absorbed $10 billion in net cash from the acquisition of the new operations. It left Jamaica Producers with around $1.3 billion in cash and short-term investments as at June.
Both Pan Jam and Jamaica Producers were among the first companies to list on the stock market in February 1969 at the founding of the Jamaica Stock Exchange, and both remain as listed companies post-merger.
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Jamaica Producers’ vision for its future
June 22, 2023
The amalgamation of Jamaica Producers Group and Pan Jam into the Pan Jamaica Group will form one of the largest conglomerates in the Caribbean with diverse business arms.
Talks to come together began in 2016, when Jamaica Producers exited from the Mavis Bank coffee deal but had a good working relationship with Pan Jam and sought to find a project they could collaborate on.
Speaking at Jamaica Producers annual general meeting (AGM) last week, held at the Marriott Courtyard Hotel in New Kingston, Group CEO Jeffery Hall said the rationale for coming together was a question of scale.
“A major focus for us looking forward will be to look at our portfolio of businesses and concentrate on those we believe have scale. So we address scalable markets and scalable opportunities and at the same time rationalise the portfolio to remove those that don’t have the scale that we need,” explained Hall.
He pointed to the fact that the Pan Jam Group is a significant player in financial services with a 30.2 per cent stake in Sagicor. That is notable, said Hall, as with that holding, it is resident here in Jamaica with a tangible net worth in the country whether it be in farming, property, ports, hotels.
“We like the idea of having a resident investor in Jamaica represented as a significant block shareholder on the board of a major financial institution. That speaks well for what that financial institution can do for this country. That is our goal, to maintain our role in governance and to support enterprise in the market with Sagicor’s position as the leading life insurer in Jamaica, leading pensions company in Jamaica, leading asset manager in Jamaica, as a leading bank, as a leading general insurer provider, as a leading cambio – a full range of financial services which we believe is so critical to Jamaica.
“Jamaica Producers has always been in the shipping business. It also began life in the banana commodity business. Commodities has also been an important part of the economic landscape of Jamaica whether its sugar, banana or bauxite. If Jamaica is to achieve its ambitions, a higher share of its GDP will have to come from services. We believe there are a range of services in which Jamaica is and can be competitive. This includes logistics which have some Caribbean nexus with our shipping line and Kingston Wharves being examples of that. Other areas of interest for us include the BPO sector (and we are very pleased to have an investment in Itel), attractions (Chukka) and tourism.
“We believe that for Jamaicans who want to have a piece of the global services sector that has a Caribbean nexus, the Pan Jamaica Group represents that opportunity and we are pleased to be invested there,” said Jamaica Producer’s CEO.
So the vision is clear, to proliferate this nexus of touch points as the Caribbean does remain trade dependent. This sees the new Group offering housing solutions, shipping solutions, port solutions throughout the Caribbean. Of course, the financing available to these enterprises must remain strong.
There are four defining clusters that represents Jamaica Producer’s 34.5 per cent interest in the Pan Jamaica Group, which has total assets of J$115 billion and net assets of $80 billion.
Pan Jam’s real estate holdings are indeed prized asset. The Scotiabank building in downtown Kingston, the Pan Jam building in New Kingston, Manor Park — its buildings define the city’s landscape. What distinguishes it from other property managers is its chosen select clusters and the way in which it curates the environment. The new Pan Jamaica Group intends on continuing that tradition.
Jamaica Producers will invest side by side with the Group and ensure the property clusters are well tenanted. The aim here is to deploy and source capital to develop infrastructure.
A prime example of that is a project to bring 15 million gallons of water a day from River Cobre to Kingston which will be a US$77 million project. This should go some way in solving the water problem in the metropolitan area of Jamaica.
An investment will also be made in a power plant at the University of the West Indies.
“Our fresh juice business is unique, it is a market leader. It is No.1 in the Netherlands and Belgium. It is emerging with leading retailers in Germany, Czech Republic, Greece and Scandinavia. We now have a pan European platform for our juices.
“In the Caribbean we are dominant with our snacks and fruit and hold a position with them in the travel retail market. Our goal with our specialty foods is to stay on the macro trends of health and fresh food consumption with our farms in Jamaica,” declared Jeffery Hall at Jamaica Producers 2023 AGM.
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JP’s revenues jump 16% to $29 billion in 2022
June 19, 2023
Local conglomerate Jamaica Producers Group achieved significant financial success in 2022, according to its recently released annual report.
The company’s consolidated profit reached $4 billion, while profit attributable to shareholders saw a remarkable 25 per cent increase, amounting to $2.3 billion.
JP’s revenues displayed robust growth, rising by 16 per cent from 2021 to reach $29 billion, with both the logistics and infrastructure segment and the food and drink sector contributing equally to this positive trend, as outlined in the annual report.
JP, which recently finalised its amalgamation with Pan Jam to form Pan Jamaica Group Limited, expressed optimism about its prospects.
Chairman Charles Johnston highlighted the collective strength resulting from the merger, emphasizing the potential for enhanced shareholder returns through diversification and a fortified foundation for both organic and acquisition-driven growth.
With a strong focus on logistics and infrastructure, as well as food and drink, JP now possesses a 34.5 per cent shareholding in the newly formed Pan Jamaica Group, which boasts total assets amounting to $115 billion.
During JP’s annual general meeting held on June 15, Group Managing Director and CEO Jeffery Hall provided key insights into the company’s revenue distribution, noting that approximately half of the business’s earnings originated from operations in the Americas and the other half from Europe.
Additionally, he highlighted that JP’s food and drink division accounted for roughly 60 per cent of the total revenue, while the infrastructure and logistics division contributed 40 per cent. Intriguingly, 80 per cent of the revenue from the food and drink segment was generated in Europe, while 86 per cent of the company’s assets were concentrated in the Americas.
Hall underscored JP’s remarkable performance over the past decade, citing a tripling of shareholder equity and quadrupling of group revenue during that period. He further highlighted the company’s tenfold increase in profits over the same timeframe.
Regarding JP’s plans, Hall mentioned the company’s 34.5 per cent stake in Pan Jamaica Group, along with its ownership of 3,500 acres of land in St Mary, making JP the largest landowner in the parish.
Additionally, JP holds $1.5 billion in cash and short-term investments. Hall expressed confidence in the amalgamated entity, stating that Pan Jamaica Group’s diverse portfolio and effective management would provide JP with opportunities to explore commercial ventures within and beyond Jamaica.
Following the amalgamation, Pan Jamaica Group now includes several well-known businesses in the local market, such as Sagicor, Kingston Wharves, Itel BPO, the Rok Hotel, the Courtyard by Marriott (the venue for the AGM), JP Snacks, St Mary’s, and Chukka.
JP, together with its various entities, employs approximately 2,000 individuals, further solidifying its significant presence in the Jamaican economy.
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JP’s European dream
May 17, 2023
THE Jamaica Producers Group has set its sights on substantial growth in its juice business in Europe, having now upgraded the production facilities to be more efficient in the face of inflationary pressures caused by the war in the Ukraine.
Jeffrey Hall — who has transitioned from being the managing director of Jamaica Producers Group to the CEO of the Pan Jamaica Group in the aftermath of the amalgamation of Jamaica Producers Group and PanJam Investments earlier this year — told the Jamaica Observer that its JP Juice Group subsidiary has identified significant opportunities to profitably grow its trading relationships with major European retailers and food service enterprises.
“We have doubled the size of the juice business over the last five years and see the potential to again double it over the next five years while broadening the range of products that we supply,” Hall highlighted in a telephone interview with the Business Observer on Tuesday as he expounded on the opportunities the company is targeting.
The doubling in the size of its juice business was attained with the March acquisition of a 100 per cent stake in Belgium-based Juicy Group NV and HPP Belgium NV.
“This juice plant has significant expansion capacity and will allow us to grow our strategic relationships with large-scale retailers and food service establishments for fresh juices in northern Europe,” Hall continued. He said the company intends “to stay in this category, which is a high growth premium category in Europe”.
In addition to the Belgium business the Jamaica Producers Group owns A.L. Hoogesteger Fresh Specialist B.V. in the Netherlands and is the major shareholder of Co Beverage Lab S.L. in Barcelona, Spain. The businesses produce freshly squeezed, short shelf life juices and smoothies and serve as co-packers of juice for major supermarket and food service entities in the Netherlands, Belgium, Scandinavia, Switzerland and Italy. All operate under the JP Juice Group that itself is part of the company’s Food and Drink Division, which is the largest contributor to revenues of two operating segments for the Jamaica Producers Group. The other operating segment is the company’s Logistics and Infrastructure Division.
In the first quarter of the current financial year which ended on March 31, the Jamaica Producers Group said its Food and Drink Division’s sales touched $4.2 billion, which was up 2 per cent from the prior year. Profit before finance cost and taxation for the division was $31 million, a reduction relative to the prior year.
The company said revenue growth in its Food and Drink Division was weighed down by the less-than-stellar performance of its Caribbean Food Group, which it labels that division’s “less significant part”. It comprises food production and distribution entities in the Americas.
“Although we experienced revenue and margin growth in a few products and markets, the Caribbean Food Group had a challenging quarter,” the Jamaica Producers said in notes accompanying the release of its financials for the first quarter of the the 2023 financial year.
“This was in part due to seasonally affected commodity prices and sales volumes. We have established turnaround and revenue growth plans for the most challenging parts of the business and expect to see the benefits of these before the end of the year,” it continued.
“We expect to see improved commodity prices during the course of the year,” Hall said when asked to provide further details about what will lead to a turnaround of its Caribbean Food Group subsidiary. He said those commodities he is expecting to see lower prices in this year include bananas, plaintains, breadfruit, cassava and cooking oil — which are used to make its ready-to-eat snacks.
“We are also expecting to see growth in the Latin market. We operate in the Dominican Republic as well as Central America and we expect growth in that market in the snacks business.”
Hall said he expects to see the Caribbean Food Group boosting its sales by at least 15 per cent this year. The company’s products sell in Caricom countries, Panama, the Dominican Republic, Colombia and Curacao. Under its Caribbean Food Group, Jamaica Producers operates several brands including St Mary’s and Snacks Caribbean for ready-to-eat snacks, Tortuga for baked products, and an ice and water company named Grupo Alaska in the Dominican Republic. Its snacks line is produced in the Dominican Republic, where a third of its 2,000 employees are stationed, while the baked goods are produced in Jamaica where close to half of its employees work. The company, which has a history in Jamaica’s banana industry, said the fruit now only contributes three per cent of total revenues.
“We expect some growth in that business but [do] not expect it to be a major part of the enterprise in the next few years.”
Turning to the company’s other operating segment, its logistics and infrastructure business which includes Kingston Wharves, Geest Line, JP Shipping, Miami Freight and Shipping Company, and Capital Infrastructure Group, Hall noted the plans for further growth.
“We believe there is tremendous opportunities in e-commerce and we have rebranded the business to JP Logistics Solutions to begin to clarify for our customers what opportunities we can give to them,” Hall said. Through its logistics solutions subsidiary, Jamaica Producers operates full-service freight consolidation, logistics, and freight forwarding services to support cargo movements between the United States, the United Kingdom, and the Caribbean. The logistics and infrastructure business produced a very strong first-quarter result. It accounts for the major part of the assets of Jamaica Producers and in turn, its profits.
In the first quarter, January to March, the Logistics and Infrastructure Division generated profit before finance cost and taxation of $1.1 billion from revenues of $2.9 billion, an increase of 11 per cent relative to the comparable period in 2022.
“JP’s shipping and logistics business is, in general, delivering attractive returns to shareholders under current economic conditions,” the company said.
During the first quarter of the current financial year Jamaica Producers Group recorded revenues of $7 billion, which is up 2 per cent from the same period a year ago with shareholders’ profit of $439 million up 8 per cent.
The results do not include any sums from PanJam Investments, which Jamaica Producers amalgamated with in April to form the Pan Jamaica Group. Jamaica Producers Group owns 34.5 per cent of Pan Jamaica Group and is the entity’s largest shareholder. The Pan Jamaica Group is an associate company of Jamaica Producers Group. Hall said despite the amalgamation, Jamaica Producers Group will remain listed on the Jamaica Stock Exchange.
Hall affirms, “The completion of our agreement with PanJam has laid the foundation for the formation of the Pan Jamaica Group Limited. We are excited about the enhanced opportunities for diversification, business development, and acquisition-led growth that lie ahead.”
Pan Jamaica Group will hold JP’s existing businesses in food and drink, and logistics and infrastructure, alongside its substantial Jamaican property portfolio and interests in financial services, hotels and other investments.
“Looking forward, the business will form part of the Pan Jamaica Group alongside the PanJam’s Group investments in financial services, and its substantial property portfolio, and other investments,” Hall concluded.
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PanJam, JP Group complete $110-b deal
April 5, 2023
Jamaica Producers Group Limited (JP Group) and PanJam Investment Limited successfully completed the $110-billion amalgamation transaction on Friday.
The deal saw JP Group transfer its ordinary shares in intermediate holding company JP Global Holdings Limited to PanJam in exchange for JP Group being issued ordinary shares in PanJam equivalent to 34.5 per cent of the issued share capital. JP Global Holdings held the operating assets of the JP Group minus any retained assets and liabilities. JP Global’s total assets as of October 1 was $44.29 billion with equity of $34.81 billion, $17.55 billion being attributable to shareholders.
Based on PanJam’s last ordinary share count of 1,066,159,890 shares as per the Jamaica Stock Exchange’s (JSE’s) trade information, this translates to 561,565,133 ordinary shares issued to JP Group. This would value the shares at $29.82 billion based on Friday’s closing price of $53.11. PanJam closed the first quarter with a market capitalisation of $55.62 billion plus a best bid of $55.90 and best ask of $55.95.
“We are pleased to have completed this transaction which represents an important milestone for both companies. By combining our strengths and expertise, we are well-positioned to capitalise on new opportunities and create long-term value for our shareholders,” said newly appointed chief executive officer (CEO) of Pan Jamaica Group Limited Jeffrey Hall in the JSE disclosure.
PanJam is to be renamed Pan Jamaica Group Limited subject to the approval of the registrar of companies. Alan Buckland has been appointed the chief financial officer (CFO) of the Pan Jamaica Group with Eric Scott being given the new role of deputy CFO on April 1. Simone Pearson was appointed the General Counsel of the Pan Jamaica Group. JP Chairman Charles Johnston, Buckland, and Hall were appointed as directors to the PanJam board on April 1. Hall will also serve as the executive vice-chairman of the Pan Jamaica Group.
The new Pan Jamaica Group will not have St Lucian New Castle Company Limited in its corporate structure following the sale by PanJam in late December, but will include Belgian company The Juicy Group NV and HPP Belgium NV after the JP Group acquired it on March 21. PanJam sold its New Castle stake for $2.27 billion with a gain of $1.38 billion.
JP Group earned $29 billion in revenue and $3.99 billion in consolidated net profit for 2022 while PanJam earned $2.35 billion in income and $4.79 billion in consolidated net profit.
As part of the amalgamation, PanJam chairman Stephen Facey was appointed to the JP Group board on April 1. Dr Swee Chua was also appointed to the JP board on the same date. Dr Chua is Hall’s wife.
This means that both the JP and Pan Jamaica boards will have 12 directors each.
While the deal was finalised between both companies on Friday, the ordinary shares have not been converted into stock units as yet and registered on the JSE. Thus, the recognition of JP’s 34.5 per cent ownership stake in PanJam and PanJam’s asset base increasing are not immediately clear as yet. Both companies will be required to submit their first-quarter numbers by May 15. JP’s stock price closed at $21.91 on Friday with a best bid of $21.94 and best ask of $21.95.
Before the deal was consummated on March 31, the executives and directors of both companies were purchasing ordinary shares. A PanJam director exercised his stock options for 1,878,728 ordinary shares on March 8 while another exercised his options for 400,193 shares on March 31. A PanJam connected party also sold 4 million shares at $56.55 on March 8. Two JP Group directors purchased 1,513,386 shares and 696,326 shares in March as well.
“The successful amalgamation of JP and PanJam marks a significant milestone in our journey towards creating greater value for our stakeholders and driving sustainable economic growth for Jamaica. Together, we are poised to unlock new opportunities, harness collective strengths, and enhance our competitive edge, as we continue to pursue our vision of building a better, brighter future for Jamaica,” said newly appointed president of the Pan Jamaica Group Joanna Banks in the release.
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JP acquires Belgian company
March 22, 2023
Jamaica Producers Group (JP) has completed yet another acquisition of a beverage manufacturer in Europe.
In a release on the Jamaica Stock Exchange on Tuesday, the company announced 100 per cent acquisition of the Juice Group NV and HPP Belgium NV, which positions the company to become a market leader in the fresh juice industry in Europe, operating in three countries.
This purchase follows the outright acquisition of AL Hoogester Fresh Specialist BV in the Netherlands and a majority stake in Co Beverage Lab SL in Barcelona, Spain, in September 2021.
“We are delighted to add Juicy Group and HPP Belgium NV to our pan-European juice group,” CEO of JP Group Jeffrey Hall is quoted as saying in the release.
“This acquisition furthers our strategic objective of being a pan-European leader in the fresh juice business. It allows us to expand our production capacity, drives innovation and serve our core customers even better. We congratulate the JP team in Europe for delivering on this product in the wider group,” he continued.
With each location having its own unique target market and brand, JP will continue to provide a wide range of cold-pressed fresh juices and smoothies across the continent, taking advantage of high-pressure processing at each state-of-the-art production facility.
The acquisition of the Belgium-based businesses, completed on March 21, 2023, will be included in JP Group’s assets that are set to be transferred under to the Pan Jamaica Group as part of an amalgamation agreement between JP Group and PanJam Investment announced late last year. As per the agreement, JP will transfer its core businesses to PanJam in exchange for 34.5 per cent stake in the investment management company.
With shareholders of both companies giving their approval for the merger, the completion of the amalgamation is set for the end of April.
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Hall: Strong dollar cost JP $500m
Friday, March 17, 2023
The rise in value of the Jamaican dollar last year cost Jamaica Producers Group Limited hundreds of millions of dollars.
The bulk of Jamaica Producers’ $29 billion in annual revenue takes the form of foreign currency that’s converted to Jamaican dollars. The company holds food and logistics assets in multiple countries.
“Whereas in 2021 we might have had an exchange gain, we had an exchange loss in 2022 and the combined impact, or delta, on that is north of $500 million in the year,” said JP Group Managing Director Jeffrey Hall, who was the featured guest at the Mayberry Investors Forum on Wednesday.
The audited financials indicate that the group booked $415.6 million as exchange losses related to translation of its foreign operations, compared to a gain a year earlier of $77.4 million.
Jamaica Producers holds stakes in local wharfing operations which bills clients in US dollars but settles in local currency, according to Hall. Those operations and others which hold assets in US dollars were slightly affected by the 2.3 per cent appreciation of the Jamaican dollar against its US counterpart. But Jamaica Producers also owns manufacturing businesses in the Netherlands and Spain, which made a seven per cent decline in the euro of particular concern for Jamaica Producers.
“There was a material appreciation of the Jamaican dollar to the euro,” said Hall.
Holding cash in hard currency has generally worked to Jamaica Producers’ “advantage” over its 90-plus years of existence, said Hall. That’s because the local dollar has depreciated in almost every year since Independence in 1962.
“We are still keeping a long US dollar position on the cash side of the business,” he added.
In 2022, the Jamaican dollar meandered beyond $158 to the USD at one point, but climbed back down to close the year at $152.05, having appreciated by two per cent.
Relative to the euro, the JMD appreciated by seven per cent in 2022.
“So we had to overcome that to get the results in 2022,” said Hall of the currency appreciation.
So far in 2023, the exchange rate has ranged above $155 against the USD, but was nearly back to its starting position on Wednesday at $152.65; while the Jamaican dollar has appreciated two per cent against the euro, which traded at $161.30 on Wednesday.
Jamaica Producers made $3.98-billion consolidated profit for its full year, compared to $3.82 billion a year earlier, but that’s because its share of profit from associated companies and joint ventures grew fivefold to $1.35 billion.
The rising value of the dollar cut into its margins, producing less profit from the group’s operations, at $3.5 billion, compared to $4.47 billion in 2021.
PanJam merger
The operations of Jamaica Producers Group will be merged with PanJam Investment by the end of June to create the new Pan Jam Group Limited. Initially, both groups had expected completion of the tie-up by March. PanJam Investment owns real estate and holds investments in Sagicor Group Jamaica and other companies.
Under the deal, Jamaica Producers will transfer its assets to PanJam and take a 34.5 per cent stake in the new Pan Jam Group. The food and logistics company’s assets are currently being held in a new entity called JP Global, which is being utilised to effect the transfer.
Hall indicated that the merger at $110 billion in combined assets, would allow Jamaica Producers and PanJam to acquire larger companies.
“We are always looking at deals,” said Hall. “Our shareholders equity is between US$450 million and US$500 million. We definitely have space to accommodate more leverage. I would say, from the standpoint of equity, we are well covered in the immediate term,” he added.
Shares in JP and PJAM both trade on the Jamaica Stock Exchange. After the merger, both will remain listed on the market. Pan Jam’s accounts will reflect its businesses, but also the new assets acquired from Jamaica Producers. Jamaica Producers’ books, on the other hand, will largely reflect the performance of Pan Jam Group as its investment.
“JP will become a holding company, with its primary asset being 34.5 per cent of Pan Jam Group, which we think is a great asset, along with some cash and real estate,” said Hall.
Hall said that the merger was done to increase shareholder value in the long run through acquisitions and revenue growth.
“We are not chasing short-term stock gains,” said Hall. “It is not a primary focus of ours to run up the share price to hit some narrow quarterly event. It is a priority for us to acquire and hold very good, long-term businesses.”
The combined enterprise will have four main business activities: property and infrastructure, primarily in Jamaica; specialty food, primarily in Europe (Netherlands and Spain) and Caribbean snacks and agro-businesses in the region; global services, which include investments in the outsourcing sector, hotels, tour attractions, and freight forwarding; and financial services holdings in Sagicor Group Jamaica.
“Those are the businesses we are in, and we intend to stay in those businesses,” said Hall
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UPDATE: FTC okays PanJam-JP merger
March 6, 2023
amaica’s competition watchdog, the Fair Trading Commission, FTC, has given its approval to the pending merger of the operations of Jamaica Producers Group with PanJam Investment Limited.
It paves the way for the businesses to start doing business formally under the new name of Pan Jamaica Group Limited during the second quarter of this year.
“The parties expect to have the legal aspects of the asset transfers completed this month and expect the businesses to come together operationally early in the second quarter,” said Managing Director of Jamaica Producers, Jeffrey Hall.
Under the deal, Jamaica Producers will transfer its assets to Pan Jamaica and take a 34.5 per cent stake in the new company in return. The JP assets are currently being held in a new entity called JP Global, which is being utilised to effect the transfer.
The merged entity will create a group with more than $110 billion in assets, about half of which are expected to be in the form of cash and investments.
The new Pan Jamaica Group will be chaired by Stephen Facey. Hall will become vice-chairman and CEO, and the current CEO of PanJam, Joanna Banks, will hold the title of president.
Within two years, however, Facey is expected to give up the role of chairman to Hall, and Banks will step into the CEO position.
“We asked our lawyers to cooperate fulsomely with the information requests of the FTC. We are satisfied with their overall conclusion on the matter,” said Hall in the wake of the FTC decision.
The executives expect the amalgamation to close this month. Later in the year, all the shares in JP Global will be transferred to PanJam, and PanJam will issue an equal number of shares to Jamaica Producers Group equivalent to 34.5 per cent interest in Pan Jamaica Group.
The FTC examined whether the merger would affect competition.
“A key objective of reviewing a proposed merger is to assess the importance of competition, which may be lost if the merger was consummated,” said the FTC in the report that was dated January 24 but published a month later on February 28.
The FTC stated that while both entities are vast in scope, their products and services do not overlap in any market. Additionally, the agreement does not have any intent, or effect to substantially lessen competition in any market, the competition regulator said.
“The conclusion of the investigation is that the amalgamation agreement between JP and PanJam does not contain provisions that are likely to breach the FCA,” the commission noted, with reference to the Fair Competition Act.
On that basis, the agency issued a ‘statement of non-objection’, allowing the deal to be consummated.
PanJam subsidiaries include an investment company; nine property development, management, and rental companies; two hotel management companies; and one food manufacture and distribution company. Additionally, the property and investment holding conglomerate has shares in two financial service providers and a hotel management company.
Jamaica Producers, a diverse food and logistics conglomerate, with holding spanning the Caribbean and parts of Europe, operates 17 subsidiaries and associated companies. Its businesses span shipping and logistics, food manufacture and distribution, and infrastructure financing.
Jamaica Producers will continue to operate as a separate entity, post-merger, as an investment holding company. It will also remain listed on the stock market and will the renamed Pan Jamaica Group.
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Done deal! Shareholders approve JP, PanJam merger
December 25, 2022
Shareholders of Jamaica Producers Group Limited (JP Group) and PanJam Investment Limited gave their stamp of approval last Thursday to the proposed merger of the entities as they voted in favour of the various resolutions at the respective extraordinary general meetings (EGM).
The JP Group EGM was held at the ROK Hotel in downtown Kingston where veteran and younger shareholders listened and opined their thoughts to the management on the proposed $110-billion deal. While Edward Isaacs dissented to the resolution, the other shareholders present all voted in favour of the transaction with PanJam.
“Few regional businesses have the breadth, scope and network of the Pan Jamaica Group. This enterprise, collectively, will be the largest landowner, including Kingston Wharves, in the capital city of Jamaica. JP expects its interest in the Pan Jamaica Group to deliver strong returns for its shareholders. JP will be a supportive and vigilant shareholder,” Hall said after the EGM on the future of JP.
At the PanJam EGM, Chief Executive Officer Joanna Banks gave reasons as to why shareholders should support the deal. This also included pro-forma information which shows that the combined business would have the fifth-largest market capitalisation on the Jamaica Stock Exchange (JSE) based on last Tuesday’s closing prices. Although Orette Staple voted against resolution one, the majority voted in favour of the proposed amalgamation with the remaining resolutions receiving unanimous votes in favour.
“This is truly a historic day for PanJam and for all of us as shareholders of the company. Through this business combination, with exposure to such a wide range of sectors, we become the quintessential Jamaican conglomerate. Any investor, either local or international, who wants exposure to the broad Jamaican, regional economy should look to the expanded PanJam as the perfect investment vehicle,” Banks said on the significance of the deal.
With shareholder approval secured, JP Group will now execute a scheme of reconstruction where the operating assets of the group, excluding some retained capital and assets, will be transferred to JP Global Holdings Limited within one month. This will require confirmation from Tax Administration Jamaica that the proposed amalgamation is exempt from transfer tax.
Once this step is complete, JP will transfer 561,565,133 ordinary shares in JP Global free from all liens to PanJam in exchange for an equivalent number of shares in PanJam equivalent to 34.5 per cent of PanJam’s issued share capital. The shares will then be listed on the JSE which would result in JP Group becoming the largest shareholder in the PanJam, which is to be renamed Pan Jamaica Group. This is expected to be completed by March 31, 2023, which is the end of the first quarter for both companies which will remain listed on the JSE.
JP Managing Director Jeffrey Hall presented several positives of the deal which included an aggregated set of financials which showed consolidated revenue of $30.2 billion, $11 billion in consolidated net profits and a capital position of $20.3 billion in cash, repos and investment securities.
Hall, Alan Buckland and Charles Johnston are set to be appointed to the board of Pan Jamaica which will be capped at 12 directors while JP will appoint one director nominated by the PanJam board to its board of directors. The Facey family would end up owning 26 per cent of Pan Jamaica while other existing shareholders would own 39.5 per cent of issued shares.
Based on PanJam’s $820.94 million in interim dividend payments for 2022, it would have collected $283.23 million in dividend income based on its expected stake. JP Group’s accounting treatment of the Pan Jamaica Group will likely be revealed around May. JP Group will also collect $109 million in annual rent related to the Agualta Vale land’s, other commercial retained properties and intellectual property which will be retained.
JP’s stock price closed at $22.23 on Friday while PanJam’s price closed at $55.21 which leaves it down 15 per cent year to date. Despite the decline, an investor purchased 1.7 million shares of PanJam for $93.84 million on Friday.
“Pan Jamaica Group will thrive and endure because it is strategic, diverse and bold and builds on a solid foundation. We have the capital to seize new opportunities and to withstand the difficult macroeconomic environment,” Hall closed.
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JP, PanJam EGMs set for December 22
December 8, 2022
Jamaica Producers Group Limited (JP Group) and PanJam Investment Limited have set December 22 as the date for their respective extraordinary general meetings (EGM) whereby shareholders will vote on the proposed $110-billion transaction.
JP will hold its EGM at 10 am by the ROK Hotel in downtown Kingston while PanJam will hold its EGM at 11 am by the Courtyard by Marriott in New Kingston, St Andrew. The amalgamation is conditional on the approval of the majority of ordinary JP Group shareholders for the ordinary resolutions at its EGM and by three-fourths of the ordinary PanJam shareholders on the special resolutions at their EGM.
The transaction will occur with the JP Group transferring its operating assets to its newly incorporated intermediate holding company JP Global Holding Limited through a scheme of reconstruction. JP Group will then transfer JP Global’s issued and outstanding ordinary shares amounting to 561,565,133 ordinary shares to PanJam in exchange for 561,565,133 shares in PanJam or a number which equates to 34.5 per cent of the issued share capital. This would push PanJam’s issued ordinary shares from 1,066,159,890 shares to 1,627,725,023 shares. JP Global’s pro forma asset base was $44.29 billion.
“I believe the transaction will be good for Jamaica. We are seeing growth and opportunity for Jamaica right now. This is the time for the best Jamaican companies to step up and invest in our future,” said JP Group Managing Director Jeffrey Hall in an e-mail with the Jamaica Observer.
However, JP Group will retain $1.45 billion in cash and marketable securities to fund its declared dividends, ongoing operations and retained liabilities. It will also retain ownership of certain real property interests that have long been associated with JP (including three properties in Jamaica and one property in the United Kingdom), as well as ownership of its subsidiary Agualta Vale Limited which has land in St Mary, Jamaica, as its principal asset. Thus, JP’s sole operating asset will be its 34.5 per cent stake in PanJam.
The amalgamation will have a series of steps which include an exemption from the Tax Administration Jamaica from transfer tax, exchange of JP Global and PanJam shares and listing of the newly issued PanJam shares on the Jamaica Stock Exchange (JSE). JP and PanJam don’t expect the proposed amalgamation would be in contravention of the Fair Competition Act and that no take-over offer will be required. However, the Bank of Jamaica will have to be notified prior to the amalgamation taking effect due to a change in the majority shareholder of PanJam which has a substantial interest in Sagicor Bank Jamaica Limited.
PanJam shareholders would vote to approve the proposed amalgamation which is explained in the amalgamation booklet. They would also vote to make PanJam’s authorised share capital become unlimited, that the company’s name be changed to Pan Jamaica Group Limited and several amendments be made to the company’s articles of incorporation. The maximum number of directors on the board would be reduced from 15 to 12 along with the inclusion of a definition for significant shareholding which comprises not less than 21 per cent of the company’s issued shares. significant shareholding interests would be able to appoint and remove three directors from the board.
“Undoubtedly, the transaction’s success strengthens PanJam’s balance sheet, diversifies our investments and empowers the company to take advantage of opportunities that will come both locally and globally. As an investment company, PanJam leverages resources, both capital and expertise, in diverse enterprises for the benefit of our shareholders and ultimately national development,” said PanJam Executive Chairman Stephen Facey.
Facey’s major interest is through connected party Boswell Investments Limited which is the largest shareholder in PanJam with 32.30 per cent. With the dilution set to occur from the newly issued shares, Boswell will have a 21.16 per cent interest in PanJam which is above the significant shareholding mark. His cousin Paul Facey is the other Facey family member currently represented on the PanJam board.
Some of the proposed elements in support of the transaction include leveraging the economies of scale in central costs, benefits from geographic diversification, the combined balance sheet and liquidity and benefit from sector diversification. These sectors include financial services, global services, specialty food and property and infrastructure. The combined balance sheet would have $66 billion of net assets and $11 billion of cash and marketable securities.
“Upon completion of the proposed amalgamation, the combined business will emphasise a business strategy that directly and expressly harvests certain opportunities that would not be immediately available to either enterprise operating on its own. At the same time, they offer the group a powerful network of global relationships, opportunities, insights and market presence that can only come from the holding of a portfolio of investments that cuts across a broad range of industry sectors,” PanJam’s booklet stated.
Both companies relied on a fairness opinion from Ernst & Young Services Limited which used the income, market and asset approach to analyse the value of JP Global and PanJam’s assets along with determining a fair share exchange ratio. Ernst & Young agreed that the proposed transaction was fair from a financial point of view to JP and PanJam shareholders.
Both JP and PanJam’s share prices have experienced a substantial boost since the announcement on November 21. PanJam’s share price is currently trading at $57.09 which leaves it down 12 per cent year-to-date while JP trades at $23.26 which has not only erased its losses earlier in 2022, but also leaves it up five per cent year-to-date. JP even traded at a new 52-week high of $28 last Friday. At Monday’s market price, PanJam would be valued at $92.93 billion with JP’s proposed stake worth $32.06 billion.
JP Group just declared a $0.30 capital distribution to its shareholders to be paid on January 19 to shareholders on record as of December 20. This payment totals $336.64 million and is the highest payment to date for shareholders. PanJam shareholders are set to be paid a $0.10 dividend totalling $106.62 million on December 15.
“We all wish for peace for Jamaica and for improved education opportunities for young people. Private enterprise and economic development has a role, but these are the real outcomes that we ultimately care about right now,” Hall closed as his wish for Jamaica in 2023.
Jamaica Observer at http://bit.ly/40uiTic