Top 10 business stories in 2010

IMF deal signed

Jamaica and the IMF signed a US$1.3-billion Standby Agreement in February 2010 after a series of back and forth negotiations between the two parties. The Jamaica Debt Exchange (JDX) — a voluntary programme under which holders of Government bonds accepted lower interest rates and longer maturities — was critical to the IMF signing the deal and is expected to save the administration $40 billion in interest expenditure on domestic debt over the current financial year. Increased market confidence arising from the IMF support resulted in an appreciation of the Jamaican dollar, which ended the year trading at just under J$86 to US$1.

Air Jamaica sold to Caribbean Airlines

Government in April concluded negotiations with Trinidad-based Caribbean Airlines Limited for the acquisition of the fleet and routes of Air Jamaica, which was a financial burden on the country. Under the agreement, the government of Trinidad and Tobago was slated to contribute working capital while the Jamaican Government assumed the debt and covered the winding-up costs.

At the time of its sale, Air Jamaica had an accumulated debt of some US$1 billion ($89.5 billion) but the deal still sparked anger among some Jamaicans who viewed the move as a ‘sell-out’ of a cherished national asset.

David Smith convicted

David Smith, the Jamaican foreign exchange trader whose private investment club Olint collapsed in 2008, was in September sentenced to 6 1/2 years in prison after he pleaded guilty to two counts of conspiracy to money laundering and two counts of conspiracy to defraud in the Turks and Caicos Islands (TCI). Smith, whose assets were frozen in the TCI, is facing several multimillion dollar lawsuits in Jamaica and the TCI from disgruntled persons who were attracted to Olint’s promise of 10 per cent interest per month on their investments.

Dudus unrest hits businesses

Businesses are still counting the cost of civil unrest which was sparked when gunmen loyal to Christopher ‘Dudus’ Coke, the alleged crime lord wanted by the United States to face gun-and drugtrafficking charges, engaged agents of the State for three days in May in West Kingston. Seventy-three lives were lost, many businesses looted and Jamaica’s image damaged during the fighting.

Junior Market listings galore

Last year saw the highest amount of listings on the Jamaica Stock Exchange (JSE) in 25 years with seven new listings on the JSE Junior Market. The listings boosted the profile of the secondary market and JSE general manager Marlene Street Forrest last week said that a further 10 more companies — including manufacturing, entertainment, shipping, tourism and retail companies — are expected to list in 2011. A listing on the Junior Market provides small and medium-sized enterprises (SMEs) a 10-year tax incentive, in addition to the equity financing to fund expansion and growth. During the first five years of the listing the companies pay zero corporate tax, while half of the current rate is charged for the last five years.

It’s Proven

Proven Investments Limited (PIL), a partnership of Jamaican investment bankers, made big moves in 2011 and silently emerged as a powerful force in the local financial sector. Its private placement of 200 million shares, which opened on January 27, was quickly snapped up by 150 private and institutional investors and netted US$20 million. The firm in August completed the purchase of Guardian Asset Management Jamaica Limited (GAM) and posted a net profit of US$5.55 million for the seven months ended September 30, 2010.

Paymaster loses copyright case

The Supreme Court in May threw out a copyright infringement/breach of contract claim brought by Paymaster Jamaica against GraceKennedy and software developer Paul Lowe, a landmark ruling which brought to a close a chapter in the decade-old legal tussle. Paymaster was ordered to pay damages to Lowe for an injunction

obtained in 2000, blocking his marketing of the bill payment software at the heart of the dispute. Paymaster was also ordered to pay damages to GraceKennedy Remittance as a result of the injunction, barring its continued use of the multiple bill-payment software, which was licensed to it by Lowe.

Telecoms sector continues to attract huge investments

Local telecommunications providers continued to invest top dollars in the competitive industry. Digicel in August became part of a select few firms globally to launch fourth generation (4G) technology for wireless Internet, while LIME in December rolled out its Mobile TV, which offers a range of options for viewing on a mobile phone. Claro, owned by the World’s richest man Carlos Slim, pumped millions of dollars in marketing and continued to gnaw at shares in the mobile phone market. Additionally, Flow continued to introduce new broadbrand products and services, including an offering of up to 100 megabits per second (Mbs) to residential customers.

Sugar assets sold to Chinese

Government in July sealed the divestment of the final three sugar estates held by the Sugar Corporation of Jamaica (SCJ) — Monymusk, Bernard Lodge and Frome — to Chinese company Complant. In a deal worth more than US$10 million, Complant purchased the three remaining sugar estates and leased approximately 30,000 hectares of sugar lands to increase the production of cane islandwide.

Alcohol tax drama

Goverment quietly announced in November that alcoholic beverages would be taxed $960 per litre of pure alcohol — the SCT increase implemented effective December 1, 2010 with a view to raising an additional $772 million for fiscal year 2010/11. What ensued was a brouhaha that pitted two of the country’s largest alcohol beverage companies — Red Stripe and Wray & Nephew — against each other, with Red Stripe intimating that it may even pull its export business as a result of the tax measures.

Source: JA.Observer