The state-operated Development Bank of Jamaica (DBJ), says it is accelerating ridding itself of what could be billions of dollars worth of equity it holds as minority and majority shareholder in several businesses.

In the process, the DBJ is freeing up staff and raising cash to concentrate on ramping up its core development lending function in keeping with the mandate being insisted on by the cash-strapped government.

Several properties under the control of the bank are also being made ready for sale.

The Bruce Golding-led administration had declared from as early as 2007 that it would be divesting several state assets held by the DBJ. However, faced with a multi-billion dollar shortfall in revenues this year - a possible $30 billion hole by the end of this month - and with uncertainty about its ability to fund spending plans, including making more loans available to the productive sector in the next fiscal year, there are indications that Golding is pressing the DBJ to speed up the sales.

Divesting holdings

The DBJ admitted it was divesting several of its holdings to raise cash for lending.

"In keeping with the merger (of the National Development Bank of Jamaica and the Agricultural Development Bank) in 2006, DBJ is focussed on its core business of making loans to the productive sector and is no longer in the business of holding equity investments in companies and operating these companies itself," a prepared response from the bank in reply to questions from the Financial Gleaner said. "These functions are better suited for entrepreneurs in the private sector and, as a result, the bank is in the process of divesting its equity positions in a number of companies."

The latest DBJ-held assets to hit the market are DBJ's 91 per cent share of Davon Uniforms International Limited, the Kingston-based company which manufactures uniforms and other apparel for the local and export markets, and the old cotton polyester factory at Old Harbour in St Catherine.

Bids invited

The DBJ has invited bids for the divestment of the textile company and potential takers are being asked to get hold of a copy of the divestment information memorandum, execute a confidentiality agreement and request additional information in keeping with the government's privatisation guidelines.

The company, which has been in operation since the early 1960s, was one of the pioneers in the local textile trade. Previously owned by David Chin, a Jamaican Chinese, Davon was placed in receivership and taken over by the former National Investment Bank of Jamaica (NIBJ), one of the forerunners to the DBJ, when the manufacturing concern apparently ran into financial trouble in 2004.

Last remaining operators

The company is one of the last remaining operators in the crumbling apparel industry. According to the DBJ, Davon has, over the years, generated average annual sales of US$75 million and is said to still have a large customer base of some 400 - facts the bank will be leveraging for the sale.

"The Davon quality has stood its ground over the years," said a source close to the company. "People have gone elsewhere to buy the imported goods, which is cheaper but what they recognise is when they buy the imported goods those fabrics wash out but the Davon products last them until the next uniform is due."

The company has 95 workers, who own the remaining almost 10 per cent of the company, but the DBJ is giving no assurances about the future of the staff, saying the new owners will decide what the staffing will be like after it is divested.

Old Chinese legacy

As reported in The Gleaner yesterday, Government has also put up for sale, again, the old cotton and polyester mill in Old Harbour, St Catherine - this time, more as a piece of real estate and, perhaps, as scrap metal.

A legacy of Chinese aid in the 1970s, the cotton-polyester mill was an iconic symbol of early Sino-Jamaican relations, but began to suffer with the start of the liberalisation of the market in the 1980s.

The factory, on 21 acres, closed for long stretches, limped along until its final closure at the end of 1996 and was put up for sale the following year. However, the facility, with outmoded machinery in a high-cost market has to date found no buyer.

dionne.rose@gleanerjm.com