Business News of Monday, 24 July 2017
Tongues are wagging at the Volta Star Textiles Company Limited (VSTL), a state-owned world-class yarn and grey baft-producing company in the North Tongu District of the Volta Region.
This development, Today gathered, follows agitations by the workers aimed at resisting plans by government, through the ministry of trade and industry to shutdown the company again at the detriment of over 1,200 workers.
The trade and industry ministry, Today understands, in consultation with the PricewaterhouseCoopers (PWC) Ghana Limited, are planning to abrogate the contract between the company and the Bullion Group Consortium and re-open the tender process to potential investors.
This situation, Today has learnt, is causing some anxiety amongst the workers, many of whom fear will lead to the closure of the company again.
The abrogation of the contract, Today discovered, is scheduled to commence at the beginning of August 2017.
They pointed out that the VSTL was only an employable venture for the teeming youth in some parts of the districts in the region which were currently battling with unemployment, following the collapse of the Aveyime Rice Project located at Mafi-Aloryi in the Central Tongu District.
The VSTL, Today gathered, was hit by financial constraints and thus needed a capital injection of GH¢20 million in order to become viable.
As at May 2017, the total debt of the Volta Star Textiles Company Limited stood at GH¢13.4 million, Today gathered.
Speaking on the floor of Parliament, Minister of Trade and Industry, Mr. John Alan Kyerematen, disclosed that the company owes the Electricity Company of Ghana (ECG) a staggering GH¢3.8 million, GRA GH¢1.0 million, SSNIT GH¢1.0 million and EDAIF (now Ghana EXIM Bank) GH¢6,144,771.
He stated that VSTL also owed service providers and staff salary arrears to the tune of GH¢1.47 million.
Government, the minister noted, was currently looking for a strategic investor, who will assist with the required capital injection to restructure the company to ensure that it produces at optimum capacity.
“The company owes so much to state agencies, and government, the sole shareholder, has not been able to adequately provide the company with the required working capital in order to make its operations viable,” he stated.
The ministry, on August 20, 2014 appointed PricewaterhouseCoopers (Ghana) Ltd., (PWC) as a Transaction Advisor to assist in the restructuring of the company.
PWC completed the first phase of the project, which involved an independent business review of Volta Star Textiles Limited, including a valuation of the company in May 2015.
The second phase of the project involved the disposal of 70 per cent shares of Volta Star to a strategic investor with the requisite expertise and resources to restructure the company.
In February 2016, the ministry requested prospective bidders to submit technical and financial proposals. Three companies submitted technical and financial proposals in April 2016.
These were Bullion Investment Group, China Yuemei Group and Kingdom Business Venture Capital Limited.
After the evaluation of the bid proposals, Bullion Group Consortium was adjudged the Preferred Bidder mainly on the strong textile partners they presented in their bid and their financial bid.
The company was to pay $13 million for the 70 per cent VSTL shares.