September 25, 2018 / 6:08 PM / 24 days ago

Ivorian banks consider offering discount on SAF-Cacao debt

ABIDJAN, Sept 25 (Reuters) - Banks in Ivory Coast are considering whether to offer a discount on the debt of failed giant cocoa exporter SAF-Cacao to entice buyers, three bankers involved in the negotiations told Reuters on Tuesday.

A court ordered in July the liquidation of SAF-Cacao, the top exporter in the world’s leading cocoa grower, over defaults on cocoa contracts during the 2015-18 seasons.

Banks are ready to offer discounts to buyers if it allows them to recover part of their claims estimated to be around 160 billion CFA Francs ($289 million). They are expected to vote on the proposition next Monday, the sources said.

“We have at least two buyers...who could buy back the group with assets and liabilities but they asked us for a debt discount and a repayment step to finalise the buyout,” said the director of one bank involved in discussions.

An agreed purchase could help alleviate a wider crisis in the banking sector triggered by a sharp drop in world cocoa prices in the middle of the 2016/17 season that left many local exporters, who had speculated prices would rise, unable to execute their contracts and pay back bank loans.

As a result, banks have threatened no pre-finance for the new cocoa harvest that begins in October if a solution is not found.

SAF-Cacao has a 100,000 square meter warehouse, a coffee and cocoa factory and a cocoa bean grinding plant in the southwest port city of San Pedro. Its group of companies, which also includes exporter CIPEXI and processor CHOCO-IVOIRE, purchases on average between 150,000 and 200,000 tonnes of cocoa beans each season.

According to several sources at the Coffee and Cocoa Council (CCC) marketing board and the banks, the group’s assets are estimated at about 80 billion CFA francs.

“All we want is to be able to recover all our debts but if it’s not possible we will have to offer a discount to the buyers if it can allow us to recover some of our money,” one banker said.

$1 = 554.4500 CFA francs Reporting by Ange Aboa Writing by Edward McAllister; Editing by Emelia Sithole-Matarise

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