PAPUA NEW GUINEA COMPANY BUYS COFFEE EXPORTER

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By Yehiura Hriehwazi

PORT MORESBY, Papua New Guinea (The National, Nov. 6) - Mainland Holdings Ltd. coffee division on Friday acquired Papua New Guinea’s third largest coffee exporter, Niugini Coffee Tea & Spice Ltd. for PGK38 million [US$13 million].

The new Niugini Coffee Tea & Spice owners have promised to work closely with farmers, plantations, and the Coffee Industry Corporation to promote and improve coffee quality and to increase output of export coffee.

With this, coffee growers were assured of better returns, the company said.

The ANZ banking group, which participated in the due diligence exercise in July this year, provided the finances to help the Morobe-based company to buy out Niugini Coffee Tea & Spice which had been in existence since 1992.

Mainland Holdings group general manager Graham Pollock said Niugini Coffee Tea & Spice was a "well-established, well-managed business with sound reputation amongst both its suppliers and its major customers."

"Niugini Coffee Tea & Spice is the largest privately-owned exporter of coffee and the third largest of all registered exporters of coffee in Papua New Guinea, exporting around 15 percent of the annual crop," Pollock said.

Mainland re-launched into the coffee business in February this year and at that time planned to acquire an existing coffee exporting company.

At about the same time the owners of Niugini Coffee Tea & Spice, Brian and Gay Stevenson, were also seeking an opportunity to divest their interest and retire to Australia.

They offered their attractive business to Mainland Holdings, which could not refuse the offer.

Pollock said the company embarked on a meticulous due diligence exercise led by Booker Tate (Mainland's corporate manager) and partners ANZ Bank, GDA Pacific Valuers, PricewaterhouseCoopers, Smiths Chartered Accountants, Ross Accountants and Blake Dawson Waldron.

Following the due diligence report, Mainland's executive committee and the board in their September meetings gave full approval to the management to pursue negotiations with Niugini Coffee Tea & Spice for the acquisition.

"Both Mainland Holdings and Mr. and Mrs. Stevenson are delighted with the outcome of the negotiations," .Pollock said.

.Pollok said Mainland Holdings aimed to leverage a number of opportunities that comes with the acquisition.

They are:

Pollock said a number of key customers overseas recognized Papua New Guinea coffee as unique and would appreciate more abundant supplies.

"Mainland Holdings will be working closely with farmers, plantations, and Coffee Industry Corporation to promote and support improved quality and increased production for export of Papua New Guinea coffee utilizing ‘fair trade’ opportunities to maximize returns to farmers," Pollock said.

Stevenson said he and his wife, Gay, set up Niugini Coffee Tea & Spice in 1992 after the collapse of Namasu Coffee so that the people of Morobe still had a vehicle to sell coffee.

"Gay spent many hours phoning friends and family for financial support to assist us with working capital since the banks did not want to really know us without collateral of bricks and mortar," said Stevenson who leaves the shores of Papua New Guinea after 38 years.

Agriculture Minister Sasa Zibe, Coffee Industry Corp chairman Pukman Kopi, Coffee Industry Corp executive director Ricky Mitio, Lae Chamber of Commerce president Allan McLay and a number of business executives witnessed the formal handover of Niugini Coffee Tea & Spice to Mainland at a function in the Lae Melanesian Hotel.

Mr. Zibe, Mr. McLay and Mitio commended the move by Mainland to buy out Niugini Coffee Tea & Spice whose staff will continue to work for the company under Mainland.

Mainland chairman Matap Embaku was also pleased with the acquisition.

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