Divestment Activities
FINSAC's search for potential purchasers for its bank and insurance company holdings is an ongoing exercise, which begins immediately upon intervention, since the orderly return of assets to the private sector is the ultimate goal set out in FINSAC's Exit Strategy (see earlier).
However, this phase of activities was necessarily addressed with caution in FINSAC's first year of life. While FINSAC is aware that it needs always to keep the endgame in mind, the final divestment moves can only emerge as results of the strategic workplan can be assessed. Divestment is a partial payback to government and taxpayers. More importantly, it is also a final opportunity to build and sustain confidence in Jamaica’s financial sector, for which intervention and rehabilitation will have laid the foundations.
Thus divestment activities at this early stage were limited. FINSAC initiated the formation of a Hotel Divestment Committee, with a mandate to ensure the timely sale of its portfolio of hotels, non-core businesses and real properties owned by the financial institutions that FINSAC has assisted. One objective is to ensure that financial institutions continue to have the liquidity needed to meet their depositor, policyholder and pension fund obligations as they fall due. A second objective is to improve the possibilities for accelerated repayment of FINSAC loans, and the payment of dividends on FINSAC's equity holdings.
With these objectives in mind, two subsidiaries in the Eagle Group of Companies were sold. These were Martins Travel, and Paul Chen Young and Associates. Both were purchased from FINSAC by the managers and staff of the companies.
In respect of non-core businesses and real properties owned by FINSAC's financial sector affiliates, FINSAC continued its due diligence review and valuation of assets, prepared offering memoranda targeted at appropriate local and/or international capital markets, formulating a structure for divestment of these assets, and identifying suitable buyers.
Grant funds have been advanced to FINSAC by IDB for local and international advisory services concerning the structured divestment of large hotels.
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