FACTORIES CORPORATION OF JAMAICA LTD
CLARIFIES ITS DIVESTMENT PROGRAMME
November 06, 2019
In 2018 the Government of Jamaica mandated Factories Corporation of Jamaica Limited (FCJ) to divest 15% of its non-performing assets to supplement the Government’s debt reduction strategy. FCJ identified 58 properties for divestment. Among the properties identified for divestment are undeveloped lands, small industrial complexes and standalone units, both occupied and unoccupied.
By policy, the divestment of all such properties must ensure that the potential purchaser displays the financial capabilities to acquire and develop the property to allow for economic growth and job creation, by facilitating players in the manufacturing, warehousing, agro processing and business process outsourcing industries.
The divestment policy is aimed at ensuring that FCJ achieves optimal market value for all assets being divested.
FCJ’s Divestment Policy also requires that once a property is identified for divestment, if occupied, the occupants would be advised first. They would have the opportunity to do a valuation and make a submission to FCJ expressing their interest. This priced submission is then taken to FCJ’ Board of Directors for review and approval. The policy ask that the sale of the property be price tested, which involves public advertising and tendering. The new reference price is the highest price submitted by the bidders. The person/entity who comes in as the first interest then gets the opportunity to match the highest bid price.
We note some concerns being expressed by our clients at the White Marl Small Industrial Complex, which have been escalated to the media. It should be noted that these concerns were raised previously by said tenants.
They were addressed at:
- A FCJ Client Symposium, which was used to formally inform the clients about the divestment and the policy and procedures to be utilised.
- A follow up meeting held at FCJ’s Head Office specifically with the clients at that SIC to further address all concerns raised at the symposium.
- A series of engagements, which followed, involving FCJ’s management and the White Marl clients.
- A series of correspondents was again circulated to the clients advising of the divestment and the protocol and procedures to be utilised.
Two specific letters were received from two clients from the White Marl Small Industrial Complex making suggestions and raising concerns. Those letters were formally responded to and followed up with meetings involving the FCJ management team.
Chief among the concerns of the clients were:
Security of Tenure, which was addressed as follows:
- The divestment stipulates that the purchaser will have to abide by the present lease agreement of the clients.
- FCJ has encouraged clients to be up to date with their lease and payments. They have also been given the option of extending the length of their lease.
- In the case of our clients at the White Marl Small Industrial Complex, both bidders in their submissions have committed to ensure that the current clients lease arrangements will not be affected.
Investment, which was addressed as follows:
- FCJ properties are rented with the following infrastructure, the four walls, the roof, bathroom, water and electrical. Our rental agreement outlines that any purpose built requirements invested in a unit to facilitate the operation of the client is the responsibility of the clients. The clients are expected within their business model to make recovery from those investments. When the tenure of their lease expires, the unit is expected to be returned in its original state.
- Where fixed exterior annexes or expansion are going to be made by the client permission has to be granted by FCJ. A design concept would have to be submitted by the client, following which FCJ reviews and if deemed suitable, approval is granted. In such cases no additional rental is taken from the client until, by negotiation with the client, his investment would have been recovered. Specific to the White Marl property, it must be noted that no additional rental has yet been charged by FCJ for any expansion undertaken by the clients.
- In cases where the expansions are removable, the client has a right to remove same. Where permanent, FCJ reserves the right to request that these investments in infrastructure remain as is to ensure the integrity of the facility is not compromised.
The status of the Divestment Process, which was addressed as follows:
- Price testing was conducted, only two bidders (two clients) participated. The evaluation and selection process, which followed all the divestment guidelines, was reviewed by the Board and submitted to our ministry and Cabinet for review and approval.
- Cabinet’s approval is required for any sale of government property above a certain threshold.
- It would be premature and inappropriate to hold further discussion on a process which is going through an approval process.
Both the Board of Directors and the management of FCJ are fully committed to utilising the Government of Jamaica’s policy guidelines to address the sale of the 58 properties identified for divestment.
While we are sensitive to the concerns raised by our stakeholders, we will continue to be guided by the divestment policy in our negotiations with potential purchasers to ensure that our valued clients’ interests are protected in concluding our sale agreements.
Sign:
The Board of Directors and Management
Factories Corporation of Jamaica Ltd
