John Myers Jr., Business Reporter

Christopher Levy, senior vice-president, Jamaica Broilers, secured agreement Thursday in Paris for US$1.45 million of compensation for breached contract.

The Jamaica Broilers Group (JBG) has been cleared of any impropriety by the Jamaica Stock Exchange (JSE), arising from the trading of shares by company directors and senior managers days before the market knew of pending losses.

Late yesterday, financial director Ian Parsard also announced that its wet ethanol supplier had agreed a US$1.45 million settlement, or 75 per cent of the loss to JB Ethanol, to compensate for the default in the contract that triggered its profit concerns.

The agreement was struck in Paris, France Thursday where Broilers senior vice-president Christopher Levy, who oversees JB Ethanol, met with suppliers.

JBG did not name the supplier but it has a 50 million gallon contract with Bauche Energy.

JSE general manager Marlene Street-Forrest told The Financial Gleaner on Thursday that based on the information submitted by JBG, it appeared the company executives had no knowledge of the losses before they signalled their brokers to trade the shares.

"I feel that the company's directors may not have known about the material event at the time," Street-Forrest told The Financial Gleaner yesterday.

Parsard also said similar talks with the Financial Services Commission, were amicable.

The FSC up to press time had not responded to requests for comment.

JBG spent much of this week explaining to regulators the coincidence of its announcement of the expected US$3 million second quarter loss and the sale of shares.

No inside knowledge

Top executives of JBG met with the JSE on Tuesday to prove that its executives who traded shares close to a profit-warning notice, had no inside knowledge of the company's woes prior to selling.

According to the company, whose position was detailed in a press statement, it knew of a default on its fixed price contract for wet ethanol on September 25.

The issue was discussed at a board meeting on September 26, after which its directors and managers were advised not to trade their stock.

The JSE was notified of the expected loss late Friday, September 28.

A day before

However, JSE advisories showed that JBG's vice-president of marketing and protein products planning, David Mair sold 475,145 on September 27, a day before the company issued the notice; and that another vice-president, Donald Patterson sold 196,585 shares on September 25, two days before the notice.

On Monday when the notice was published by the JSE, JBG's stock price fell 59 cents to $4.51 after closing nine cents higher the Friday before at $5.10.

The stock slipped further on Wednesday but regained a cent in trading Thursday to close at $4.11.

Mrs. Street Forrest said JBG has been instructed to formulate and effect stronger company policy safeguards that would prevent executives from trading shares in the future so close to an event such as the one at hand.

She said even though on the "face of it" it appeared the executives had no inside knowledge, based on the information provided by the company, there must be no doubt that they may have had inside information.

Under JSE rules companies found in breach of a similar offence can be suspended from trading shares or be delisted, based on the degree of the offence.

In the meantime the JSE has taken issue with the first paragraph of a notice published by Jamaica Broilers in the print media yesterday, declaring the company's innocence.

The disputed paragraph reads: "Shares in Jamaica Broilers Group Limited were traded by some directors and senior management in September, 2007 during a time-window which is allowed by the regulations of the Jamaica Stock Exchange."

Street-Forrest said that conclusion would have to be determined by what she called the 'blackout period'.

"But in the context where there is material information or event, there is no 'blackout' period," she said.

Quoting from the JSE's Model Code, she emphasised that "directors will always be thought to be in possession of more information than can at any particular time be published. Accordingly, they must accept that they cannot, at all times, feel free to deal in their company's security even when the statutory provision would not prevent them from doing so."

Meantime, Parsard said the compensation agreement will result in a reduction in the US$3 million projected negative impact on the group's overall performance.

john.myers@gleanerjm.com