GHANA – The Produce Buying Company (PBC) Limited, Ghana’s biggest cocoa buyer, seeks to raise US$100 million from international banks help the firm sustain its operation and settle its obligations.
According to the firm’s deputy chief executive officer, Kojo Safo, the transaction, handled by an Accra-based advisory firm, should be completed before the start of the main harvest beginning October.
Mr Safo noted that the company has approached the state-run pension fund and the government to provide guarantees for the loans that are likely to have maturities of five to six years
According to a Bloomberg report, the government together with the pension fund control a majority 75 percent stake in PBC.
“The plan is to secure this long-term funding to refund the obligations due. With that you give the company headroom to operate. The conversation is at an advanced stage,” Safo said.
PBC, which also has investment in coffee and shea nut value chains, paid all interest due at the end of 2018, leaving the US$22.8 million (120 million cedis) principal of a one-year bond sold at 19 percent.
Mr Safo said that the company invested some bond proceeds to complete a hotel expansion and shea-nut processing projects, which will take more than one year to recoup.
PBC is also said to be in talks with the Ghana Cocoa Board, the industry regulator, to increase borrowing to between US$155.6 million (GH₵800m) and US$194.5 milllion (GH₵1bn) in the 2019-2020 crop year, from US$116.7m (GH₵600m) in the year that ends in September.
According to Safo, this will sustain the firm’s operations as other sources for future working capital seem to be drying up.
PBC also runs a shea nut processing facility in the Savannah Belt of Ghana, the Buipe Shea Processing Company, which process, markets shea butter and oil plants.
Last year, the company embarked on a strategy to improve its balance sheets after it plunged into a further loss of US$4.36 million (GH₵22.442m) against a loss of US$3.10 million (GH₵15.924m) for the previous year.
Mr Kofi Owusu Boateng, the company’s chief executive officer, said the firm will roll out a new management to secure equity funding to set off the company’s reliance on borrowing from the market to supplement funds for purchases.
“In the year under review, the Company spent about 45.7 per cent of its Gross Operational Earnings in servicing Finance Cost.
“Other funding options for cocoa purchases will be examined to ensure adequate and timely funding for the Company. In order to enable the Company purchase more cocoa to improve its market share, revenue and to stay competitive” he said.