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Jamaica prepping National Rums for divestment via stock market

The Government of Jamaica plans to divest its stake in National Rums of Jamaica Limited, NRJ, via the stock market but has a hurdle to clear prior to making the offer.

To facilitate the sale, the Government wants a fresh valuation done on its investment, which is being handled by divestment agent Development Bank of Jamaica, DBJ. Jamaica owns one-third of the rum company, which produces the branded Monymusk Rum.

In a January 30 filing seeking a valuator, the development bank said that based on the NRJ’s articles of association, the other existing shareholders have a “pre-emptive right” to acquire the shares.

“However, if the remaining shareholders fail to purchase the shares, the GOJ may proceed to divest the offered shares, or any part of the offered shares not purchased by the remaining shareholders, to a third party by way of public offering,” it added.

Set up in 1980, National Rums has issued capital of 300 ordinary shares held by three shareholders, each with equal blocks of 100 shares, namely, National Sugar Company Limited on behalf of the Government of Jamaica, the beneficial owner; West Indies Rum Distillery (Barbados) Limited, which is wholly owned by Cognac Ferrand, France; and Demerara Distillers Limited, which is based in Guyana.

The rum company, which mainly trades in bulk rum but also entered the branded rum market around 2011, would become the third state-owned business to list in recent years – the other two being wind energy company Wigton Windfarm Limited in 2019 and toll road operator TransJamaican Highway Limited in 2020. The Jamaican Government is also taking steps to privatise the Jamalco alumina refinery, that’s co-owned and managed by interests in Hong Kong, but that transaction is taking longer than expected to finalise.

The DBJ wants expert valuators to apply by February 20 to value the National Rum shares. In the main, the development bank wants a business valuation report of GOJ’s shareholding in the company and second, a valuation of the real estate, machinery and equipment owned by National Rums and its subsidiaries.

The DBJ initially answered the Financial Gleaner’s queries on the divestment by referencing the report. There was no immediate response to follow-up questions regarding the divestment.

Monymusk Rums sells six flagship white and red rum products: Overproof White Rum; Whispering Breeze; Special Gold Rum; Platinum Rum; Special Reserve, aged for at least 10 years; and Classic Gold, aged for five years, according to the company’s website.

The rum is distilled at Long Pond Distillers Limited in Trelawny from sugar that is cultivated and transported from the Monymusk estate in Clarendon, both owned by NRJ. The rum is aged at its Innswood location in St Catherine.

The company lists over 75 key distributors in Jamaica. Its major competition comes from Jamaica’s largest rum producer J. Wray & Nephew Limited, which controls the bulk of the white and aged rum markets.

NRJ went through a change of ownership in March 2017, when Barbados-based Goddard Enterprises Limited exited its investment under a wider deal worth nearly US$12.8 million. Under that transaction, Goddard’s ownership of West Indies Rum Distilleries in Barbados, which included its one-third stake in NRJ, passed to a French company called United Caribbean Rum Limited. United Caribbean Rum is a Barbados holding company and a wholly owned subsidiary of Compagnie de Bonbonnet SAS, a privately held French holding company that has a number of subsidiaries, including Cognac Ferrand.

NRJ directors reside in Jamaica, Guyana and Barbados, according to the Companies Office of Jamaica. They include Hugh Gentles, Vivian Brown, Vasuedo Singh, Yesu Persaud, Alexandre Gabriel, and Andrew Hassell. The company secretary is Richard Bloomfield. Gentles was the most recent appointment in 2022 following Brown and Gabriel’s appointment in 2018.

Jamaica’s rum exports totalled US$36 million between January to August 2022, compared to US$39.5 million a year earlier, according to Statistical Institute of Jamaica data. That said, annual exports grew by about five per cent in 2021 relative to year 2020. Latest production figures show that distilleries produced 8.2 million tonnes in the first quarter of 2022, compared to 6.7 million a year earlier.

National Rums of Jamaica, which is headed by CEO Martha Miller, did not immediately respond to requests for comment.