Troubled FTN Cocoa Moves To Raise Fresh $6.3m Loan To Survive Liquidation

Distressed FTN Cocoa Processors Plc has turned to taking $6.3m loan from OH Ecosystems LLC in other to dodge bankruptcy.

After an emergency meeting held in Lagos, the company is willing to provide security in favour of Norwegian Investment Fund for Developing Countries and OH Eco for the convertible loan.

Norwegian Investment Fund for Developing Countries had funded OH Eco with $12m to invest in the Nigerian cocoa industry.

In a regulatory filing seen by THE WHISTLER on Wednesday, FTN Cocoa which had not declared revenue directed its directors to “form Technical and Management alliances with any organization local/foreign in such a way as would be mutually beneficial to the parties involved.

FTN Cocoa is among the four surviving cocoa companies in the country after 16 folded during the administration of former President Muhammadu Buhari.

The cocoa processor resolved “That the Company be and is hereby authorised to obtain a convertible loan of $6,350,000 from OH Ecosystems LLC (“OH Eco”)

“That the Company be and is hereby authorised to provide security in favour of Norwegian Investment Fund for Developing Countries and OH Eco in accordance with the terms of the relevant security documents.

“That pursuant to the Company’s Articles of Association, the Directors having recommended, be and are hereby authorized to raise such additional amount considered necessary for the business operations/working capital requirement of the Company in any way thought fit and subject to the approval of relevant Regulatory Authorities and on such conditions/terms as the Directors may determine”

Faced with a liquidity crisis, FTN did not generate revenue in the first quarter of 2023.

The cocoa processor did not generate revenue from export activities as well as local sales of cocoa cake, cocoa butter, cocoa powder and cocoa liquor, the books showed.

In December 2022, FTN recorded a loss 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 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.