PBC Shareholders approve share consolidation plan

Shareholders of Produce Buying Company (PBC) Limited have approved management plans to consolidate the company’s existing shares to boost their chances of seeking additional funding from investors.

Shares consolidation is a process where a company replaces existing shares with fewer shares without changing the composition and value of the shareholding. This means that PBC’s current 480 million shares in issue will be reduced to 48 million, according to the plan to consolidate 10 shares into one.

The move is in line with the PBC’s plan to undertake a rights issue to raise a 200 million Ghana cedis as working capital. Mr Kojo Atta-Krah, Managing Director of PBC, told shareholders that the consolidation would attract a broad range of investors by reducing share volatility perceptions.

The consolidation, he said, would also prepare the company for any future raising of share capital and boost shareholders dividend per share as amount declared would be spread over fewer shares. Mr Atta-Krah said it had become necessary for PBC to raise working capital to avoid the over-reliance on bank loans and overdraft at a great cost to finance operations.

He said currently as much as 30-40 percent of the Gross Profit was used in paying financial costs associated with the debt-funding option, a situation he described as unsustainable.

However, the resolution on the rights issue, he said, was deferred for further consultation with government, the majority shareholder. Dr John Frank Abu, Board Chairman, told shareholders that the company saw 2012 gross profit declined as much as 63 percent, to 13.7 million Ghana cedis from 37.4 million Ghana cedis the previous year.

The company’s total cocoa purchases also fell 17 percent to 312,312 tonnes compared with 374,858 tonnes in the 2010/11 season. Dr Abu assured shareholders that the company would improve operational capacities and efficiency as well as manage various investment projects to boost shareholder value.

Shareholders approved a dividend of 0.0062 Ghana cedis per share, amounting to a total of 3.022 million Ghana cedis.