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addition, she indicated that, although the market price and
demand for jojoba oil were strong and were expected to remain so:
The jojoba industry in general is reflecting the same
kind of problems that are being experienced by HJI and
its affiliates. Virtually all jojoba producers are
experiencing cashflow problems. Several more years are
required than were originally predicted to reach
commercial production. The development of efficient
harvesting, although steady, has delayed cashflow even
further. In most cases, the capital required to attain
positive cashflow is exceeding the amount committed by
the original investors and the sources for obtaining
additional funding are severely limited.
Whittaker further suggested, as an alternative to the dissolution
of TJV or the provision by the JDP and JDP-II limited partners of
a working capital loan, a plan:
calls for the combination of up to 3,000 acres of
plantations in the Hyder area into a single company
(which, for want of a better name, we will currently
call "NUCORP"). A key objective of the plan is to
develop an entity which is capable of attracting new
investment capital while preserving the capital of the
original investors. Under this plan, HJI and all of
the Partnerships with which HJI is affiliated will be
invited to contribute their assets to NUCORP in
exchange for stock in the company. Cash will be raised
from both existing partnerships and new investors. All
partnerships will have the opportunity to preserve
their relative equity positions. However, in order to
attract new investment capital, the interests of all
previous capital will have to be subordinated to any
new contributions.
The formation of such an entity creates a viable
vehicle for funding and managing a number of
plantations which might otherwise fail. The Company
will attract new investment capital by offering a
preferred position and lower risk to potential new
investors. It will be capable of borrowing funds by
using certain personal guarantees of new key investors
as well as its assets as collateral for such loans.
NUCORP should post a profit by 1989 and show
significant cashflow within a 3- to 5-year period. By
then, the Company will have several alternatives
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