Cocoa Processing Company (CPC) is in talks with a syndicate of banks to restructure its $20.5 million debt to be payable in five years, Nana Agyenim Boateng, the Managing Director, said on Tuesday.
The Company is also in discussions with Ghana Cocoa Board (COCOBOD) and the Cocoa Marketing Company to convert the outstanding debt on cocoa beans into equity to improve debt to equity ratio and to foster investment confidence.
Already, agreement had been reached with COCOBOD to cap CPC’s medium term loan of $32.022 million at an interest rate of 1.5 per cent annually and payable in 10 years.
Speaking at the Facts behind the Figures Programme on the Ghana Stock Exchange, Mr Boateng said the Company’s inability to pay the loans on schedule had resulted in astronomical increases in its financing costs.
However, he said, management of CPC had been careful not to add to its indebtedness to COCOBOD for cocoa beans deliveries over the past five years.
COCOBOD, in 2005, converted $15.78 million of its old debt into equity and in 2008 a further $32.022 million of debt into long term loan at an annual interest rate of five per cent.
Mr Boateng said because of CPC’s dire situation, the Company was compelled to enter a three-year tolling arrangement with Touton to process 25,000 metric tonnes of beans annually.
The agreement with Touton will end in June 2020.
Mr Boateng said although the CPC had a total capacity of 64,500 tonnes, the audit of the machines of the factories gave a performance assessment of 70 to 80 per cent.
In this direction, he said, the Company would solicit for some working capital to boost operations and revenue earnings through a retooling and replacement of some machinery parts to enable the Company to operate at a 74.4 per cent capacity, equivalent to 48,000 tonnes.
He said management was negotiating with banks for financing support to enable CPC to procure 23,000 tonnes of cocoa beans from Cocoa Marketing Company for every season.
Under the arrangement the financial institution will pay for the cocoa beans supplied to CPC and delivered into a designated warehouse.
Going forward, Mr Boateng said, the Company would seek innovative ways such as improve visibility of its products to increase local consumption and designation of the confectionery factory as a fully-fledged subsidiary, among other things, to expand its revenue earning base while reducing the cost of operation.