Levers ready to pull out

IN most countries of the region the departure of the oldest and probably one of the most substantial investors in the country would be a cause of major concern. But in Honiara the proposed sale of Levers 60 per cent holding in its Solomon Island subsidiary Unilevers has barely raised an eyebrow. Given that the company is the biggest private sector employer in the country and at year end 1992 had 1222 employees the government should be concerned. However, with the economy going through a major logging boom the departure appears almost unnoticed.

Levers has been in the Solomon Islands since the turn of the century when it bought a substantial holding that over the years it has developed into a successful copra, coconut oil and cocoa plantation. In 1905, the company bought some 36,000 hectares of land.

Over the years it has divested itself of a large chunk of that land but its two glantations in the Solomons, one at .ussell Island (10,613 ha) and the smaller but much more significant Lungga (3133 ha) plantation located on some of the most valuable land in the Solomons, between Honiara town and Henderson Airport. It is understood that

the land is held under crown lease and not under customary ownership for a period of 75 years.

The official reason that the lawyers in Honiara give for Unlevers pullout from the Solomon Islands is that the parent company which has plantations in eleven countries wishes to concentrate its efforts on growing tea and palm oil, which is where the parent clearly sees that it has a commercial advantage. The fact is that over the past five years the company has recorded substantial losses on its oper ations in the Solomon Islands. In large measure this can be explained by low copra and cocoa prices over the period.

The company has, however, according to normally well informed sources in the legal community, accumulated a sub stantial amount of debt to the parent company, what is believed to be a total of 5158.7 million in 1992.

Over the past three years for which such data is available the company has lost substantially from its operations and has not made a pre-tax profit for five years. At the moment tne company’s fixed assets are valued at some Sls2l million. Is is understood that an offer for the 60 per cent interest in the plantations has been received and accepted from Jim

Boyers and Australian who had substan tial logging interests in the Solomon Islands in the past. His son Peter Boyers is the owner of Concrete Industries in the Solomons.

The significant question is of course what will become of the two plantations.

It is understood that as part of the deal between Unilevers and Boyers will con tinue to operate the Russell Island plantation under the existing manage ment. However the Lunggaplantation is very much up in the air. The reason is that approximately a quarter of the land on the plantation is ideal for tourist and commercial development as much of it faces the beaches the US marines landed on during the Battle of Guadalcanal.

There can be no doubt that the capital will, in the coming years, expand along the road to the airport and as result the value of the plantation will come in its subdivision rather than continuing to operate it as a cocoa plantation. How ever while this makes eminent sense in the longer term this must have very serious consequences in a country which has normally got between two weeks sand month foreign exchange cover for imports. As yet the government has made no comment about the proposed sale. □