FTN Cocoa Processors Plc, one of Nigeria’s oldest cocoa processors may convert some of the debts owed Mirae Asset Securities formerly Daewoo Securities (Europe) to ordinary shares as it has been unable to generate revenue or make profit due to chronic liquidity crisis.
FTN Cocoa is among the four surviving cocoa processors in Nigeria after 16 closed offices in 2018.
According to the President of the Cocoa Association of Niger, Sayina Riman, the surviving cocoa companies are Oluji Cocoa Company Ltd, Ile-Oluji; Coop Cocoa Company Akure; Ede Cocoa Plant Products, Osun State and FTN Cocoa.
Despite Nigeria’s position as the number 8 largest cocoa exporter, all the companies are struggling.
FTN Cocoa crisis began when one of the company’s foreign partners, Transmor Commodity USA, experienced financial problems and went into liquidation.
Faced with liquidity crisis, FTN did not generate revenue in the first quarter of the year. There was no sales made from the export of cocoa butter and cocoa cake during the period was zero.
Over the years, the company recorded loss and in March continued with a loss of N89.75m. In December 2022, FTN lost N431.1m.
In its books for the first quarter ending March seen by THE WHISTLER, the company valued its total assets at N7.24bn while it has a total liability of N8.89bn, implying the company faces insolvency.
The company’s books showed that 11 of its employees resigned between January to March leaving the company with 63 employees, down from 74 employees as of December 2022.
The company owes creditors a total of N7.99bn. FTN owes O H Original global commodity N5.2bn; owes cooperate bond valued N2.7bn and working capital loan (Zedcrest Capital Limited) of N76.6m.
The company had issued an 18-year JPY 500 million 0% coupon Bond in 2008 due in 2026 to Daewoo Securities (Europe) with an option to convert the bond into ordinary shares of FTN Cocoa Processors Plc at maturity.
The bond is valued N1.78bn, yield not factored and it is expected to be repaid in three year-time.
But the company admitted it may convert the bond to shares.
Daewoo Securities and Mirae Assets merged in 2016 to form Mirae Asset Securities.
FTN said, “The bond has a 4.375 per cent yield to maturity. The convertible bond of JPY 500 million has been converted into Naira at the ruling exchange rate of N3.5872/1yen on 31 December, 2021.
“It is expected to be partly or fully repaid in 2026. However, there is the option of converting the bond into ordinary shares at a floor rate of N0.50 per share.”
Checks showed that FTN has an authorized share capital of 5,000,000,000 ordinary shares of 50k worth N2.5bn.
Its Issued and fully paid share capital 2,500,900,000 worth N1.95bn as of March.
The company had decried, “One of the company’s foreign partners, Transmor Commodity USA, unfortunately, had financial problems and went into liquidation; this led to a virtual closure of operations.
“Staff salaries, statutory payments, secretary and auditors’ fees with other financial obligations including listing fee are all outstanding. Moreover, almost all the members of staff of the company have resigned their employment due to the company’s inability to pay their salaries.”
“In view of the above, the management of FTN Cocoa has been scouting for funds to save the company from total collapse. The company is glad to notify its stakeholders that some level of progress is being recorded in respect of the expected funding and that there is hope the company will soon come out of its financial problem.”
Source: THE WHISTLER
