The Managing Director of Aluworks, Ernest Kwasi Okoh, says the company is now in the market in search of a strategic investor that will help bring liquidity into the firm’s operations.
Aluworks, which has already identified Katling Limited as a potential strategic investor, believes a new investor will help to bring down the interest payment position of the firm and also boost its financial status and production volumes in the short- to medium-term.
“Our next step is to look for new financing, which is why we have passed a resolution to talk to strategic investors. Once they invest in the company — and we are confident this will happen sometime in 2016 — we can write-off all those facilities and reduce the interest level that is turning us into a loss.”
Speaking at the 2014 Annual General Meeting of the company in Accra, Mr. Okoh and members of the board were given approval by the shareholders to rope-in new investors in order to reduce their interest payment level and boost production.
He admitted that “operating profit is good, the business itself is good if we have volume; and because we don’t have much volume the revenue we generate is not much. That is why we are looking for new investors.”
According to Mr. Okoh, Katling Limited comes with an “interesting proposition for us”, and have already promised to do “something meaningful” with the company.
“We will be negotiating with them soon. If it works, this company is back” he revealed in an interview.
“At this stage, we will be presenting to them our capital expenditure plan that we have been working on for a long time, but because of financing we have stalled a bit.”
He further explained: “It is this plan that will form the basis for the discussion, and they may bring on board other things which are not in our plan. So it is at that point we will know which way we are going.”
Katling, which has bought shares in COCOBOD, is expected to improve the company’s performance; and it represents the investment arm of Fujaro Gold, which is part of Denta Resources of India.
Presently, Aluworks is producing at 18,000 tonnes capacity with an old cold mill despite having the potential to produce at a full capacity of 30,000 tonnes. The cold mill works by metal stock being passed through one or more pairs of rolls to reduce the thickness and make it uniform.
However, Mr. Okoh maintains that acquisition of a new cold mill set at a capacity of 30,000 tonnes is needed: “We can do 30,000 now, but as it grows older it reduces; but today, as we speak, the capacity is 30,000 tonnes.”
He says the company is “looking for metals to do that. Can Valco supply us? Because if power cuts is affecting them, then we are back to same old challenge. But they are improving.
“In the beginning of 2015, because of power fluctuations the quality we were getting was poor. They were not giving us the right quality and it’s not their fault. The plants that they have, if you don’t have constant power then the pot-lines go haywire. When that happens you get poor metals, so that is what we had to contend with.”
Following the improvement of power supply in the recent months, Mr. Okoh is hopeful of continuous power supply in order to enhance their industry and other businesses.
Seth Adjei, the board chairman, and other directors were handed an extension of mandate by the shareholders.