Staff of the Cocoa Processing Company (CPC) has blamed the limited reinvestments in the company on the stringent regulations of the Ghana Stock Exchange (GSE), which makes it illegal for the government to come to the aid of the cocoa grinder despite having a 94 per cent stake in it.
To help reverse this for the company to regain its past glory, the staff, led by the Chairman of its Senior Staff Union, Mr Francis Aloko, said the company must be delisted from the Accra bourse to help create way for a state-funded bailout.
The bailout will help to reverse the fortunes of the company and put to good use its 64,500 tonne-processing equipment, Mr Aloko told journalists at the company’s premises in Tema.
The delisting is one of many initiatives the staff is proposing which they hope will help lift CPC from its current quagmire.
Another is the proposal to opt out of the Free Zones programme to be able to sell majority of its processed cocoa locally.
Making CPC SOE
Despite being co-owned by the Ghana Cocoa Board (COCOBOD), the Ministry of Finance, the Social Security and National Insurance Trust (SSNIT) and some other private investors,the CPC, which was established 36 years ago, has been dogged with mounting debts arising mainly from loans taken in foreign currencies.
The company also owes COCOBOD some US$100 million for beans supplied for processing.
Due to these challenges, the company’s fortunes have been dwindling, resulting in non-payment of dividends on consistent basis.
This has impacted negatively on the share price of the company, one of the things motivating the staff of the CPC to push for delisting.
Mr Aloko said it did not make economic sense to allow the six per cent shares, which are owned by individuals, to tie the government’s hand from investing in the company.
The delisting will move the CPC from a public listed company to state-owned enterprise, making it possible for the government to use COCOBOD to supply beans to the grinder for processing.
Calling the shots
The Public Relations Officer of the CPC, Mr Ekow Rhule in an interview with the Daily Graphic admitted that the company was not doing well on the stock exchange.
“If you look at the shareholding structure, it means those on the market itself are just about six per cent and it ties the hands of everyone. If we delist, then it means if its COCOBOD that has taken over, we will be working for them. This will also free the hands of the government to invest money into it,” he stated.
He said delisting the company was something it was looking at but cannot do it on its own.
“We will ,therefore, go to the shareholders to discuss it with them. COCOBOD is the majority shareholder and they call the shots so whatever they agree on, they can influence the others to get on board” he added.
Debt to syndicated banks
Mr Rhule also indicated that the US$20 million it owed its syndicated banks was the only external debt on the books of the company, with almost US$100 million owed to COCOBOD.
He said the debt to the syndicated banks had been an albatross around the neck of the company and if COCOBOD could even provide the company with the cocoa beans for processing, it would be able to repay the debt and make the company more profitable.
“Even if we were doing half of our capacity per year, we would have paid all our debts by now. The major problem of the CPC is beans supply,” he noted.
He said the company had been unable to purchase cocoa beans because “there is an escrow account and anytime we export, 80 per cent of the proceeds go to the syndicated banks and 15 per cent goes to COCOBOD, leaving us with only five per cent for our operations”.
Opting out of free zones
The acting Managing Director of the CPC, Mr Frank Asante, also told the Daily Graphic that management and staff of the company were more determined to deal with the issues that were confronting the company, stating “this time round we want to be part of the solution and we are not depending solely on the government.
As part of measures to put the company back on track, he said management was in discussions with the Ministry of Trade and Industry to opt out of the free zones.
“In the free zones, anytime you sell on the local market, it is assumed that you are exporting into a local territory and that has not been a good option for us because if you are not exporting so much, then you will never make the best out of it,” he stated.
He said operating in the free zones also meant the company had to slap about 57 per cent tax on its finished products, something that made it difficult to compete.
“We sell most of our products in Ghana and if we really want to meet the needs of consumers, then we have to opt out of the free zones,” he added.