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The Ghana Cocoa Board has overtaken the Government of Ghana as the largest shareholder of

Cocoa Processing Company Limited. This follows a conversion of an outstanding debt of US$14,087,120.50 owed to Ghana Cocoa Board into equity. As a result of the conversion, COCOBOD’s total holding in CPC has increased from 21.74% to 57.73%.

In March 2011, shareholders of the confectionery maker at an Annual General Meeting ratified the decision to convert the US$14,087,120.50 owed to Ghana Cocoa Board. Subsequent to the approval, the corporate action was executed at an agreed exchange rate of US$1.00 to GHS1.65 which represents GHS23, 243,748.83 for 937,247,936 ordinary shares. A price of GHS0.0248 per share was used in the transaction representing a 26-week average of CPC share price between June 6, 2011 and December 5, 2011.

By this action, COCOBOD has exceeded the 30% mandatory takeover threshold under the Ghana Stock Exchange’s Listing Rules. However, there are indications that COCOBOD has no such plan to takeover CPC since that will go contrary to the principle behind the divestiture of CPC in 2002 from COCOBOD to the public via the Government of Ghana.

Government of Ghana’s stake in CPC was reduced from 48.38% to 26.13% while SSNIT maintains its spot as the third largest shareholder though its holding was diluted from 18.78% to 10.15% The stake of the investing public has also been diluted from 11.10% to 5.99% as a result of the conversion.

In a related development, CPC has listed an additional 937,247,936 ordinary shares on the GSE, following the conversion of the US$14,087,120.50 owed to Ghana Cocoa Board. In relation to this, the total issued shares of CPC have been increased from    1,100,826,240 to 2,038,074,176.

CBL Research