Italian firm puts up US$15m to save sugar crop

ITALIAN company Eridania Suisse, a frontrunner in the bid to acquire the remaining three state-owned sugar estates being divested by the Jamaican Government, has inked a US$15-million interim financing deal to save the current crop.

Agriculture Minister Christopher Tufton yesterday told the House of Representatives that the financing arrangements with Eridania, which is conducting a feasibility study on the estates and also looking at the possibility of setting up a refinery at Frome, are independent of the continuing negotiations to divest the estates which are now ongoing and in which itself and Energen Development Limited are contenders.

Eridania was one of four bidders shortlisted by the Government in May as it sought to take the country's loss-making sugar industry off the public purse after an offer from Infinity Bio-Energy fell through.


Tufton said yesterday that the interim financing would allow for the necessary preparatory works for the factories as well as the field maintenance work on the three estates.

He said the Government would in return supply Eridania with 79,000 tonnes of raw sugar in the 2009/2010 crop year.

"The US$15 million is a pre-payment on the supply of this quantum of raw sugar which will be sold to Eridania at a minimum price of euro335 per tonne.
Additionally, Eridania will share with the Government of Jamaica - on a 50-50 basis - any profit made on the final sales price less agreed cost," Tufton told Parliament.

He added that the arrangement would effectively ensure the continued operation of the Frome, Monymusk and Bernard Lodge estates for the next crop year while negotiations to divest the entities are ongoing.

Last month, Tufton told Parliament that Cabinet had signed off on the divestment of the St Thomas Sugar Company to a consortium between Fred M Jones Limited and Seprod, and for the Trelawny Sugar Company to go to Everglades Farms.

At the time, he said in both instances the sugar factories and the attendant facilities, as well as the sugar cane lands were being leased for 50 years with a provision to renew the arrangement for another 25 years.

In 2007, Eridania formed a joint venture with Tate & Lyle for the marketing and sale of all sugar products in Italy. The deal was seen as a vital step in developing new sugar markets following European Union sugar reforms.

source:jamaicaobserver