Derrimon suit progresses over New York roof collapse

Trading conglome-rate Derrimon Trading Company Limited said it wants to recover the full cost of its New York investment, along with lost opportunity over the period, but stopped short of revealing a figure.

The company, which has launched legal proceedings in the United States, acquired the businesses for more than US$9 million but also suffered “US$5 million” in lost inventory.

“We are seeking to recover the loss of the asset, investment, loss of inventory, and cost of refurbishing,” Chief Executive Officer Ian Kelly told the Financial Gleaner. “It is in the millions. But I cannot say.”

The roof collapse in March 2024 forced the closure of FoodSaver New York Inc, a wholesale food distributor, and Good Food for Less LLC, a specialty supermarket catering to the Caribbean and African diaspora – both housed within a 42,000-square-foot facility on East 83rd Street in Canarsie, Brooklyn. Derrimon acquired an 80 per cent controlling interest in the two businesses in early 2021 through its New York subsidiary Marnock LLC.

The stores reopened in December 2024. “We limped along, but you can imagine the implications. We have not gotten back to the sales levels before the roof collapse,” said Kelly.

“We are now in advanced litigation against the insurance companies and landlord to recover losses caused by the collapse of the roof,” Kelly told the Financial Gleaner.

In 2021, Derrimon, via its subsidiary, paid some US$9 million for an 80 per cent stake in the New York businesses, financed in part by a $3.5-billion additional public offering on the Junior Market. The remaining 20 per cent was retained by Oralcrys LLC, an entity controlled by the former owner-operator. Kelly gave no timeline for the expected resolution of the case.

In its 2024 annual report, Derrimon stated: “While we held commercial insurance coverage, our claim was denied by the carrier and as such we are currently pursuing legal and administrative avenue to have this matter resolved”.

Group revenue fell to $2.7 billion in the quarter ended June, a decline of $1.49 billion, or 35 per cent from the restated $4.2 billion recorded in the corresponding period last year.

“The reduction in consolidated revenue can be attributed to supply chain challenges and temporary delays in working capital, which affected the timely availability of inventory within the quarter,” the report stated. “The timeliness of inventory arrival is expected to improve in the second half of the year.”

The company added that “the period continues to be affected by softer consumer demand in the Jamaican economy, which affected different segments of the group”. For the six-month period, revenue totalled $5.68 billion, down 33 per cent from $8.5 billion.

The balance sheet underscored the strain. At June, the group carried current liabilities of $8.63 billion against current assets of $6.46 billion, producing a working capital deficit of $2.17 billion – a sharp deterioration from the $124.6-million shortfall reported for the restated comparative period a year earlier.

Shareholders’ equity at the parent fell 57 per cent to $1.63 billion from $3.80 billion. Total group equity, including non-controlling interests, stood at $2.35 billion, down from $4.15 billion. Short-term borrowings nearly tripled to $1.57 billion from $577.6 million, while payables swelled to $5.31 billion from $3.58 billion.

The company lost access to some of its credit lines during the first half because of delayed financial filings. “The company didn’t have access to some of its credit lines during the first half of the year due to the delay in our financial reports,” the report disclosed. “The core business is currently working with our partners to maintain our arrangements while renewing various credit facilities.”

The restart of Derrimon’s New York operations “will allow for more capital to return to the company via management fees”, the report added.

As part of a broader debt-reduction exercise, Derrimon recently sold a St Ann property held through its Arosa subsidiary to Different Realtor at a discount to fair value. “We have also taken the decision to dispose of a St. Ann property held by Arosa. This transaction will reduce some of the company’s debt, which remains a top priority for us,” the report stated.

The company simultaneously shifted Arosa to an asset-light model. “We have shifted Arosa to an asset-light business model, whereby our external partners will manufacture the company’s brand of products,” the report said. “Arosa’s distribution framework has been integrated into Derrimon distribution segment as part of this exercise.”

Within the publicly listed subsidiaries, “management has been tasked with managing costs and margins in a slower economic climate where domestic demand and exports remain lower than last year”, the report stated. “The group has also explored opportunities to contain costs through available facilities or services that can be offered by any company.”

Derrimon shares trade on the Jamaica Stock Exchange’s Junior Market.

business@gleanerjm.com