Jamaica Broilers Group has sold its energy facility, JB Terminal Port Esquivel Limited, to West Indies Petroleum Limited (WIPL) for $4 million.

The new owner also takes over $18.5 million of debt owed to Jamaica Broilers by the ethanol business. WIPL Director Charles Chambers recently said the debt will be repaid over five years from resources generated by the business, but he also said refinancing is a likely option.

The deal amounts to $2.8 billion, including debt.

With the sale, Jamaica Broilers sheds two subsidiaries, ERI Services Limited and its wholly owned subsidiary JB Terminal (formerly known as JB Ethanol Limited), which operated the poultry group’s ethanol business and tank farm at Port Esquivel, St. Catherine.

WIPL will use the facility to augment its bunkering operations and otherwise farm out storage space for fuel. That requires a retrofitting of the infrastructure to handle heavy fuel oil, which WIPL uses in its bunkering operations. Ethanol is a light fuel. Chambers estimates the transformation will take another $2 million in investments.

Port Esquivel will be WIPL’s first land-based plant. The acquisition immediately grows the company’s capacity tenfold. Its two barges hold 42,000 barrels and 27,000 barrels of fuel, while the new plant has a capacity of 600,000 barrels.

“It gives us significant capacity to expand, but that expansion is a function of how much we can sell,” said Chambers. What he meant by that was the market is there to exploit and it was up to the company to lock in new business.

“It’s a catch-22 you have to have the capacity before you go after the business,” he said. The bunkering company currently services around 200 vessels.

Senior vice-president of finance and operations Ian Parsard held back on specifics on the debt component of the deal, saying it was confidential.

“JB Terminal had a loan outstanding to JB, so when we sold the companies to WIPL, they now essentially owe JB this money since they are external companies now,” Parsard said.

Jamaica Broilers had previously indicated its exit of the ethanol business last year May. The company entered the market nine years ago with an initial $25 million investment, and later pumped $17 million more into a second round of development.

JB Terminal produced fuel-grade ethanol from wet ethanol that it sourced from Brazil, but the feedstock and tolling contracts eventually dried up, leaving Broilers with a monthly $100,000 per month bill to maintain the idle dehydration plant.

Last year, when Jamaica Broilers confirmed its market exit, the company was estimated to have reaped $22 million in profit from ethanol over the years equivalent to just over half the $42 million invested.

However, the company now says shareholders have come out ahead likely due to the agreement to recover loans to the business.

The sale won’t have a significant impact on profit and loss, but “when the investment is assessed over the period from 2005 to now, it shows a positive return to our shareholders on their investment,” Parsard said in the statement announcing the deal with WIPL.

The sale agreement was signed June 29 between the companies, along with UC Rusal, operators of Windalco, which manages Port Esquivel.

The assets acquired by WIPL include the 25-million gallon or 600,000-barrel dehydration plant and a 25-million-gallon storage facility at Port Esquivel.

Chambers said in the joint release with Jamaica Broilers the acquisition would allow for the refueling of larger cruise liners such as Carnival and Royal Caribbean, as well as large container ships such as Zim.

He told the Financial Gleaner the re-piping and retrofitting of the complex should be finalized in four to five months, but that WIPL would begin operations at Port Esquivel almost immediately by offering storage for distillate—gasoline, diesel and naphtha—to third-party companies, which previously signaled interest in that type of service.

Broilers says the disposal frees the company to focus on its integrated poultry operations in Jamaica, Haiti and the United States.

“Also, we will release fixed assets from our balance sheet which was not operating at its full potential,” said Parsard.

“In addition, we will have an infusion of cash and other assets which will further boost JBG’s extremely strong balance sheet,” he said.