Accra, February 7, 2018//-Prudential Bank and UBA have offered the Cocoa Processing Company Limited (CPC) US$5million and US$10million guarantees respectively, to enable the leading cocoa processor to purchase cocoa beans for the production of chocolate and other cocoa products for export and local consumption.
Nana Agyenim Boateng, Managing Director of the company, disclosed this at the Ghana Stock Exchange’s Facts Behind the Figures platform – created to enable listed companies explain the reasons for their current performance to stock analysts and the media.
The company has been battling with unfavourable economic, market, operational and environmental conditions from the time it secured loans from a syndication of banks for rehabilitation and expansion works. Its losses increased from about GH¢8million in 2015 to GH¢10.9million in 2016.
However, a new arrangement between its cocoa supplier and the two banks – whereby the banks provide the guarantee for cocoa beans supplied to CPC – and a change in management and strategy portends an improved performance in the coming years.
The company has reduced its losses from GH¢10.9million in 2016 to GH¢8.8million in 2017. The first quarter of 2018’s financial year (October 2017-December 2017) shows a significant reduction in the company’s losses to GH¢1.7million.
Indebtedness to COCOBOD
The new arrangement with the two banks became imperative, given the CPC’s indebtedness to its cocoa bean supplier that made it difficult for the Free Zones company to secure enough stock for processing.
COCOBOD in 2005 converted US$15.78million of its very old debt into equity, and then in 2008 a further US$32million was converted from debt into a long-term loan at an annual interest rate of 5 percent.
CPC subsequently entered into a three-year tolling arrangement with Messrs. Touton SA to process 25,000mt of beans annually. The agreement will end in 2020.
“We do not want to renew the agreement, so it will end in June 2020. The more we process 3rd-party cocoa, the more losses we incur. We will return to profit only by processing more of our own cocoa beans,” Mr. Agyenim Boateng said.
He added: “CPC’s current financial liabilities will require some time to improve on the cashflow. Although our consolidated projected income statement shows some positivity after year-three, it will take a reasonable time for dividends to be paid shareholders.
“It will become necessary in the nearest future to revisit recapitalisation agenda as a means of raising some permanent capital for the company, and also improving the strength of its balance sheet.”
Thebftonline.com
