“These estates need a lot of investment into the field operations as well as factories and with the current structure and wages going up, we were unable to do that,” N K H Ratwatte, Chairman of Udapussellawa Plantations told LBO.
“We brought in an investor who will be able to make a large investment in the fields and factory over the first few years to improve the estates.”
The company is also looking for investors for some of its other estates, Ratwatte said.
The agreement will take effect from January 01 2007, and will end on June 21, 2045. Udupussellawa Plantations is a listed company.
In a statement to the Colombo Stock Exchange, the company said a 'Management and Operational' agreement had been executed with Stallion Plantations (Private) Ltd, for the managing and operating rights of Waldemar and Gordon Estates.
Company officials did not disclose the financial impact of the management agreement.
Stallion Plantations is expected to invest twenty million rupees over the first two years, to replant the fields, upgrade and increase capacity at the factory and replace machinery, Ratwatte said.
Udapussellawa Plantations owns 13 estates, of which Waldemar and Gordon Estates produce about one and a half million kilos of tea. All its tea is currently sold in bulk form through the Colombo tea auction, though future value addition plans are on the cards.
Udapussellawa Plantations Private Limited is over 90 percent owned by the James Finlays group through James Finlay Plantations (Lanka) Pvt Ltd, a subsidiary of James Finlays Ltd Glasgow.
Udupussellawa and Hapugatenne another privatized former state plantation were at one time controlled by James Finlay's listed subsidiary in Sri Lanka, James Finlay & Company (Colombo) Ltd.Both Udupussellawa and Hapugastenne were tied to crippling management contracts, when Finlays bought the estates from its previous owner, but Finlays later terminated the contracts to improve their financial health.