COCOBOD’s latest commercial paper offer under its GH¢16.3 billion Cocoa Notes Programme might be used to repay a bridge loan taken to refinance old debt, despite being presented to investors as a way to fund cocoa purchases.
The investor presentation from earlier this month made a clear split: about GH¢14 billion of short-term commercial paper would finance cocoa purchases, while GH¢2.3 billion of longer-term bonds would refinance existing cocoa obligations. But the presentation did not say that commercial paper proceeds could go to paying off a bridge facility linked to legacy debt.
The official prospectus provided after the presentation includes a clause allowing proceeds from either commercial paper or bonds to repay bridge funding obtained before an issuance. That funding, it says, must fit the programme’s permitted uses and details would be disclosed in pricing supplements. Yet the prospectus directs commercial paper money toward cocoa purchases and bond money to legacy debt refinancing.
This raises a question: if commercial paper is meant to buy cocoa, how would using its proceeds to repay a bridge loan for old debt meet the prospectus’s stated restrictions on bridge funding?
The issue came up again in the September 25 announcement of the first commercial paper issuance. It described the instrument as 270-day commercial paper and listed two uses for the funds: financing cocoa purchases and repaying a bridge facility taken to refinance legacy debt.
The announcement did not say how large the bridge facility is, how much money COCOBOD plans to raise in this first issuance, or how much of the proceeds will go toward repaying the loan versus purchasing cocoa. That matters because COCOBOD’s new domestic financing model aims to provide cash directly for seasonal cocoa buying. If part of the commercial paper proceeds repays old debt, that portion won’t add fresh funds for cocoa purchases.
Jerome Sam, a COCOBOD spokesperson, told JoyNews Research that the commercial paper is intended to fund cocoa purchases while bonds are meant to refinance legacy debt. But the commercial paper announcement also lists repayment of a bridge facility related to legacy debt. The prospectus allows commercial paper proceeds to repay earlier bridge funding, but says that funding must fit the programme’s allowed uses.
COCOBOD has not explained how a bridge loan for old debt fits with the stated purpose of the commercial paper: buying cocoa. Nor has it revealed how much of the issuance, if any, will go to repaying the loan.
With bidding scheduled to open on Monday, September 28, COCOBOD and Cocoa Capital need to clarify whether any proceeds from this commercial paper issuance will repay the bridge facility. If so, they should disclose the facility’s size, the amount earmarked for repayment, and the remaining funds available for cocoa purchases.
JoyNews Research said it will update the story if COCOBOD provides further details after publication.
According to Joy Online.
