Neville Blythe, head of the UGI Group of Companies.

After 13 years in the securities market, UGI Finance and Investment Limited (UGIFIL) a subsidiary of the Neville Blythe-owned UGI Group of Companies, has opted for voluntary liquidation, having run short of cash.

"The information that I can give at this time is very limited but the liquidation is mainly due to cash flow/liquidity problems that the company was having," said Dalma James, liquidator appointed to wind up the company.

"The assets are adequate but tied up in real estate and other assets not readily converted into cash, which pushed the hands of the directors to go into liquidation," James further added.

Blythe was not available for comment, with the company saying he was ill and out of office.

Later, Blythe's assistant, Melissa Merchant, who said she was speaking on behalf of an unnamed director, told Wednesday Business that UGI had recently made the decision to lock down the subsidiary - the vote was taken December 22 - and would not be speaking publicly at this stage.

A press release would be issued at some point, Merchant said.

UGI's decision to liquidate the brokerage came one day after a December 21 notice from the Financial Services Commission (FSC) to UGIFIL advising of its intention to suspend the company's securities dealer's licence.

Explaining the timeline, FSC deputy executive director George Roper said "The decision to notify UGIFIL of the FSC's intention to suspend its licence came after the management of UGIFIL had signalled to the FSC that they were contemplating taking steps to wind up the company's business."

The company, through Merchant, said the decision to liquidate was on the advice of the FSC, but Roper denied that, saying it was purely a business decision by the company.

Warning to suspend

The regulator published a notice of the warning to suspend on December 24, citing Section 8, subsections (1(d) and 5(c) of the FSC Act, which in turn referenced Part A of the Third Schedule (see insert on page 8).

The FSC did not spell out the precise reason for the suspension - 10 options are cited under the referenced third schedule - but assured investors it was monitoring the winding-up process and that their interests would be adequately protected.

The dealership, it said, manages less than one per cent of the aggregate total of investor funds under management, or FUMs, under the guardianship of licensed securities dealers.

Roper on Tuesday said FUMS at September 30, 2009 was approxi-mately $884.5 billion.

UGIFIL's portion would be less than $8.8 billion.

The company was licensed to operate on December 1, 1996. It belongs to a family of companies that at one time spanned general insurance, tourism, printing, communications and related enterprises.

Blythe two years ago sold United General Insurance Company Limited, now rebranded Advantage General Insurance, and the CVM television group - two of the largest operations in the UGI Group - to billionaire Michael Lee Chin's AIC Barbados Limited.

He retained Guardian Insurance Brokers Limited, UGI Finance, and other entities, but had said in previous interviews he was not averse to selling more assets if a buyer proposed the right price.

James, who was appointed liquidator for UGIFIL on December 23, said it was too early to give much information on the state of the company, and that he was now in the process of reviewing its liabilities and assets.

Checks with the Companies Office of Jamaica indicated that no documents pertaining to the liquidation had yet hit its database.

UGIFIL has been providing investment and financial planning services to both individual and corporate clients in the Jamaican market since 1995. Its book assets are worth approximately $900 million, an historic value, according to James.

He declined comment on what the company's liabilities might be, citing limitations on the level of information that can be disclosed.

"What we have is a situation that will take time to liquidate the assets and pay out creditors, and given the current economic situation they weren't able to do that," said James, explaining the decision to go the route of voluntary liquidation.

"Whereas the company's assets were mainly long term, its liabilities were current and short term, which brought about a mismatch between assets and liabilities and so led the company into a cash-flow problem," James further said.

Range of investors

While James declined to put a figure on the number of creditors, he said the list ranges from large to small investors.

UGIFIL's assets, according to James, span real estate, shares in companies - the major one being a 70 per cent ownership in Morgan's Harbour - and commercial paper with set maturity dates in 2010, which prevents the company from drawing down on the funds.

James has set a timeline of no longer than nine months to wrap up the liquidation process and pay out to creditors.

"Next move is to organise a meeting of interested parties and, as soon as possible, realise assets, and pay out liabilities," he said.

"While it could be done in as much as three months, with real estate and shares involved, extended negotiation will be required."

sabrina.gordon@gleanerjm.com

Dalma James, appointed liquidator of UGI Finance on December 23, 2009. - File

Financial Services Commission Act

Third Schedule - Part A

1. The prescribed financial institution has breached the provisions of its memorandum and articles of association.

2. The institution, a director or any employee or agent in the conduct of the institution's business:

(a) is engaging or about to engage in an unsafe or unsound practice in conducting the institution's business;

(b) is contravening or has contravened -

3. A director or manager has ceased to be a fit and proper person in accordance with the relevant act and the institution has refused or neglected to take appropriate action.

4. A final judgment has been obtained against the institution and has remained unsatisfied for at least one month.

5. The institution has given false or misleading information in its application for a licence or registration or false statements concerning its affairs.

6. The institution is contravening or has contravened any cease and desist order or any directions issued by the commission pursuant to this act.

7 The value of the institution's assets is substantially less than the amount of its liabilities.

8. The institution has notified the commission that it proposes to surrender its licence or registration.

9. A receiver has been appointed in respect of the institution.

10. The institution, a director, any employee or agent of the institution has, in the conduct of the institution's business, contravened a provision of the Money Laundering Act or any regulations made thereunder.