Business News of 2014-03-12

PBC secures $75 million to finance activities

The Produce Buying Company (PBC) has secured a $75 million revolving credit to finance its activities. The credit, secured under very friendly terms from an undisclosed source, will be granted at the beginning of each cocoa season and retired at the end of the season.

High interest rates

According to the Managing Director of PBC, Mr Kojo Atta-krah, the facility would provide the necessary funds for cocoa purchases and eliminate or lessen the company’s high dependence on bank loans with very prohibitive interests.

When he appeared before the Ghana Stock Exchange’s Facts Behind the Figures in Accra yesterday, Mr Kojo Atta-krah said that the new facility attracted less than a quarter of the between 22 and 25 per cent interest rates charged by commercial banks.

Rising finance cost

Finance cost, he said, had increased six fold over the last five years, recording an unprecedented high of GH¢52 million in 2013, thus siphoning as much as 46 per cent of gross profit, leaving less than enough to accommodate all other operational costs.

According to him, the established funding arrangement for cocoa purchases had not exhaustively supported the company’s funding needs. He added “the company is, therefore, left with no option than to find solace in the banks”.

The situation, Mr Kojo Atta-krah said, had not been helped either by the fact that the buyers margin paid for cocoa purchased and delivered, had remained static since the 2010/11 cocoa season, despite increasing costs of tools of the trade, increasing costs of labour, and haulage costs of cocoa.

“Under such unfriendly business operating conditions, he said, the company invariably registered a loss of GH¢8.8 million for the year 2013.

He bemoaned the company’s overdependence on loaned funds; an arrangement, which according to him, was not financially prudent despite the ability of the company to pay them off at the end of each year.

Revival of subsidiaries

Mr Kojo Atta-krah also announced that the non-performing position of the company’s two subsidiaries, which he described as fund-consumption entities and which over time created an added item of corporate expense, were ready for take-off.

“The PBC Shea Limited plant is now ready for take-off after the long wait... and the Golden Bean Hotel in Kumasi is now a top-class hotel of choice and offers first- class services to the community”, he said.