Noble Group Holding Limited (NHGL), which is an asset holding company based in Hong Kong is on the verge of offloading General Alumina Holdings assets to a third party through a call option. A deal to sell its 55% stake in (GAH) which could be seen as the umbrella company that owns the majority stake in Jamalco has been on the books for close to a year.
Since the early stages of 2022, the holding company has been seeking ways to offload the assets and focus on other interests. Interestingly the Jamaican Government which holds the rest of the 45% of the company was drumming up a process to privatize Jamalco and list it on the Jamaica Stock Exchange. This deal will definitely have an impact on such activities when the new majority of stakeholders are in charge.
The board came out with that statement which states that it was in the best interest of all the stakeholders involved in the company to practically sell it at this moment,
“Following this, the board concluded that it was in the best interests of NGHL, GAH, Jamalco, and their respective stakeholders to enter into the call option. The call option, if exercised by the third party, will result in NGHL transferring its interest in Jamalco to an owner with significant operational expertise and supply chain capabilities. The foregoing transaction will divest all the NGHL Group’s interests in GAH and Jamalco,” Noble said.
A call option is a contract that gives the buyer the right to acquire an asset at a given price by a set time period.
Looking at the situation, it is clear Jamalco has had a tough couple of years, the incident that took place in August 2021 where the Jamalco refinery, located at Halse Hall in Clarendon practically halted the entire production line there for months.
Normalcy has been brought back to the facility but on the balance books it shows that created a financial black hole for NHGL, the business has been unable to see any reasonable signs of revenue ever since.
To make matters worse, for the first three quarters of 2022, it recorded a net loss of US$97 million which is worse than the year prior when it sustained a loss of US$67 million.
As a result, it is pretty easy to see why they would want to get rid of this asset from their books and focus on other opportunities.
