The Cocoa Processing Company (CPC) is asking government for bailout to help boost its operation.
This is on the back of reports that the company is struggling due to a staggering $100 million debt. The development is thus hampering it from paying dividend to shareholders even though it is making some profits.
Speaking at the Facts behind the Figures Programme on the Ghana Stock Exchange, Managing Director of the CPC, Nana Agyenim Boateng said the Company’s inability to pay the loans on schedule had resulted in astronomical increases in its financing costs.
As a result, he stated the Company is 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, he said.
He further added that the Company is in talks with a syndicate of banks to restructure its $20.5 million debt to be payable in five years.
“…Because of the huge debt under the corporate governance law though we have been getting profit in our Profit and Loss, you cannot make dividends because you need to cap and pay off your debt minimum of GH¢83million.
“So that is where then I can get profit up to consolidated or cumulative of say even GH¢40million I can still not pay because the law doesn’t allow me, and that’s why I’m saying that if I get this [debt] halved off I would then be presentable to the banks and investors,” Mr. Boateng told Starr Business’ Osei Owusu Amankwaah at the side-lines of the programme.