Business News Thu, 31 Jul 2014

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Cocoa Processing Company needs capital restructuring

Shareholders of Cocoa Processing Company Limited (CPC) have asked its Board of Directors to consider capital reconstruction to enable them to know the true performance of the company.

Mr Sas George, president of CPC Shareholders Association, tasked the majority shareholders, namely Ghana Cocoa Board, Ministry of Finance and Social Security and National Insurance Trust, to work together to inject seed capital into the company to solve its problems.

He said: “We are in this country and foreign investors will come and buy our own cocoa beans and use our machines to process it and our company cannot do same. This is unacceptable and I’m challenging our majority shareholders to act now”. According to them, the only thing that is saving the company now is the re-devaluation process that the company embarked on.

“If it had not been the re-devaluation, shareholders’ funds will have been in negative as well,” they said, and asked the majority shareholders to either provide the company with seed capital or undertake capital reconstruction to save the company. The shareholders said this in Accra at the 2013 Annual General Meeting of the company.

The company was unable to recommend the payment of dividend as a result of financial constraints. The shareholders complained that no dividend has been declared for the past 10 years and described the situation as worrying; especially when the numbers are not showing any recovery. They, therefore, urged the directors to resort to other interventions to save the situation.

Mr Jacob S. Authur, the Board Chairman, said the company faced a number of operational challenges in the year under review and as a result it could not achieve its production target. He said the Cocoa Factories processed a total of 20,979.406 metric tonnes (69.93 per cent) as against the set target of 30,000 metric tonnes for the year 2012/2013, while Confectionery production for the period was 1,296.312 metric tonnes against the target of 1,830.00 metric (70.83 per cent).

However, he said the company has embarked a Bore Hole project and Tolling arrangement to utilize plant capacity as strategies for resolving operational challenges. “We are happy to announce to you that the tolling arrangement, which is a strategy for utilizing excess plant capacity, is now being implemented. The company, in the course of the year entered into an agreement with a foreign company to process cocoa on its behalf for a fee,” he said.

“The company has already supplied 10,000 metric tonnes of raw cocoa beans for the venture. It is hoped that the arrangement would bring in additional revenue to improve the company’s cash flow,” he added.

On the future of the company, Mr Authur said most of the structural challenges facing it had been resolved and the dedicated power line is in place, the borehole project is completed, and the International Standard Organization Certification is also secured.

He announced that COCOBOD is assisting the company to free itself of indebtedness to financial institutions to pave the way for increased supply of light crop beans to enable the company to achieve 70 per cent rate throughout production. “Preparations are also underway to break into the West African sub-regional market,” he announced.

“Arrangements are almost complete to commence from the Nigerian Market…The expansion of the of the local market is currently being pursued by the recruitment of suitable key distributors in the regional capitals for the distribution of the Confectionery products on a larger scale,” he added.

Mr Arthur also announced that the company is in serious discussions with the Ministry of Local Government and Rural Development for the introduction of the Cocoa drink into the School Feeding Programme.

He, therefore, expressed the Board’s gratitude to shareholders for their fortitude and unwavering trust in the company and pledged their commitment to continue to serve the company tirelessly for it to make profits. The company recorded more than11 million dollars as loss after tax.

Source: GNA

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