Camilo Thame, Business Reporter

Ciboney Group had its last annual general meeting in March. Here, KPMG auditor Linroy Marshall (at podium) addresses the meeting, while Ciboney director Robert Stephens consults his notes, at the Jamaica Pegasus hotel, New Kingston. - File

Resort company Ciboney Group Limited has wrapped up the US$17.5 million sale of its St. Ann-based hotel to Rios Hotel Managment, a subsidiary of the Gordon 'Butch' Stewart-controlled Sandals Group, but the cash-strapped company is still left with a deficit of $390 million and only one asset left to sell.

Ciboney, having wrapped up the Rios deal this year, is looking to offload landholdings in Westmore-land, and possibly discontinuing its operation going into the 10th year since it was taken over by the financial sector bailout company, Finsac.

But the value of the land is insufficient to cover the company's liabilities, and the company has acknowledged its tenuous position.

"Finsac owns 72 per cent ... they will have to determine where we go from here. We have to decide in the near future," director Geoffrey Messado told Wednesday Business in a phone interview yesterday.

Other Ciboney directors include Patrick Hylton and Robert Stephens.

Uncertain future

Messado's comment follows on an acknowledgement in Ciboney's audited financial statements for year ending May 31, 2006, that "the future of the company and the group is uncertain as they have been experiencing recurring losses ... in addition, the directors of the company have determined that the operations of the company could be discontinued in the forseeable future."

The Beaches Grande Sport, as it was branded by Sandals, was Ciboney's last operating asset, leaving the company with no significant revenue source to cut into the $390.8 million of accumulated deficit racked up over the decade. As at August 31, 2006 the company had $20 million in cash and cash equivalents, and resale agreements valued at $42 million.

But it is land located near Stewart's most recent addition - Sandals Whitehouse - which Ciboney's board is expecting will bring in more than a $100 million to cover the $129 million in liabilities it currently has on its books.

"Essentially, we have 16 acres of land in Whitehouse about a mile away from the Sandals Whitehouse," said Messado. "We were offered $100 million for the property but we believe we can get more for it."

The land is currently carried on the balance sheet at a value of $44 million, which was based on a February 2002 appraisal done by C D Alexander Company Realty.

Of the $20 million in cash and cash equivalents, US$254,393 ($16.5 million) is still being held in escrow by National Commercial Bank (NCB) for the group until all remaining commitments related to the sale of the resort are complete.

Sandals fully paid off the remaining $550 million on the vendor mortgage for the amount of US$14.9 million, which was to have been paid back by January 2009, during the three months ending February 28, 2006.

Ciboney then transferred $99.6 million, which the group had received from time-share owners who had bought up about 10 per cent of the units during the short-lived time share programme, to Rios as part of the sale agreement.

At the same time, the final tranche was used to pay off $280 million in long-term loans and reduce the company's payables from $428 million to $130 million.

camilo.thame@gleanerjm.com