In one year, Jamaica Broilers Group's debts have more than tripled to $3 billion, forcing the company to give over more of its profits to paying off its financiers.

At January 2008, Broilers had long term debts of $933 million, but since then it has added another 60 million gallons to double the capacity to its ethanol facility at Port Esquivel, said to be about a $1 billion investment. The upshot is a larger financing charge for the poultry and energy company whose loan servicing costs rose more than 60 per cent to $124 million in its third quarter ending January 31, 2009.

Over the broader nine-month period ending January, financing charges reached $362 million, up from $292.7 million in the year prior period.

The bill erased more than a third of the company's $947 million in operating profit.

Rein in charges

To rein in those charges and to lighten its balance sheet, Broilers has turned to the Inter American Investment Corporation (IIC) for a US$10 million loan, which the company said would be used to refinance its debt - replacing high - priced loans with the cheaper credit.

"The cash we are seeking from IIC is a refinancing tool," said Broilers' chief executive officer Chris Levy.

"We have met with IIC, and we were able to work through them the ability to source some cheaper funding to refinance."

The IIC said the loan was to strengthen Broilers' working capital position.

Levy adds that interest rates in Jamaica have gone up considerably.

"Even then you are paying debts in US dollars, which is very, very high," he told the Financial Gleaner.

"We are trying to do the same thing Audley Shaw is trying - if you have expensive money, you refinance it cheaper."

Broilers in the January quarter made $461 million profit off $6.7 billion of revenue; for the nine month period profits climbed above $520 million from top line income of $19.7 billion, all but $2.95 billion of which went back into production costs.

Having eliminated export fish last year, all business segments returned profits: poultry made operating profit of $409m; feed and farm, $410m; and ethanol $399m.

The IIC, as part of the loan approval process visited the Broilers operations, which are mainly based in St Catherine, and while it gave the company a good review on labour standards, safety, humane animal slaughter, and more, the company is required to make some adjustments.

Develop corrective actions

Various companies within the group are required to improve the emergency exit and evacuation route signage, including emergency lighting, as recommended by the IIC; while Broilers is to develop corrective actions to ensure compliance for nitrogen oxide and sulphur dioxide levels;, and reduce "fugitive dust emissions" at its feed plant.

The company is also to produce an environmental management plan (EMP), which will include a schedule for the implementation of environmental projects and a monitoring and reporting programme "to ensure that the companies within the group comply with national laws and the IIC's environmental guidelines," said the IIC review.

mark.titus@gleanerjm.com