The Cocoa Notes Programme, designed to raise funds for cocoa purchases, has raised concerns over a hidden clause allowing proceeds to settle an old bridge loan. According to MyJoyOnline, investors were told their money would go directly to farmers, but the fine print permits repayment of legacy debt. The programme aims to raise GH¢14 billion in short-term commercial paper and GH¢2.3 billion in longer-term bonds.
The investor presentation for the programme did not disclose the possibility of using commercial paper proceeds to repay a bridge loan tied to legacy debt. This detail only surfaced in the full prospectus provided to MyJoyOnline after the presentation. The prospectus contains a provision allowing proceeds to repay bridge funding obtained ahead of an issuance, subject to certain conditions.
The discrepancy has created confusion over the use of funds. MyJoyOnline notes that if commercial paper proceeds are meant strictly for cocoa purchases, it is unclear how using part of that money to repay a bridge loan for legacy debt would satisfy the prospectus's restrictions on bridge funding. COCOBOD's formal commercial paper announcement on 25 September listed repayment of the bridge facility as one of the purposes for the money raised.
COCOBOD spokesperson Jerome Sam stated that the commercial paper is intended to fund cocoa purchases, while the bonds are meant to refinance legacy debt. However, this does not address why the commercial paper announcement lists repayment of the bridge facility as one of its uses. The size of the bridge facility and the amount earmarked for repayment versus cocoa purchases remain undisclosed.
The Cocoa Notes Programme is crucial to COCOBOD's plan to keep farmers paid on time during the 2026/27 cocoa season. If a significant share of the commercial paper proceeds is diverted to old debt, that portion would not be available as fresh working capital for buying cocoa from farmers, affecting prompt payment for their beans.
Bidding on the first commercial paper issuance was scheduled to open on 28 September, but COCOBOD and Cocoa Capital have yet to clarify whether any proceeds will go toward repaying the bridge facility. The facility's size and the amount earmarked for repayment versus cocoa purchases also remain undisclosed.
The development highlights the need for transparency in COCOBOD's financing dealings. The programme's success is critical for Ghanaian farmers, who rely on timely payment for their cocoa beans. The issue underscores the importance of clear communication between COCOBOD, investors, and farmers to ensure the programme's objectives are met.
Key points
- COCOBOD's GH¢16.3bn Cocoa Notes Programme has a hidden clause allowing proceeds to settle an old bridge loan, raising concerns over transparency and the use of funds.
- The programme's success is critical for Ghanaian farmers, who rely on timely payment for their cocoa beans.
- COCOBOD has not disclosed the size of the bridge facility or the amount earmarked for repayment versus cocoa purchases.
