Cocoa Bills Debt Exchange Programme: COCOBOD offers improved terms with lower coupon rates in debt securities swap

The Ghana Cocoa Board (COCOBOD) has taken a significant step towards optimizing its funding structure by introducing a debt securities exchange programme, according to an official statement released on July 14, 2023. The initiative aims to invite holders of COCOBOD’s short-term debt securities, known as Cocoa Bills, to voluntarily exchange them for longer-term debt securities with comparatively lower coupon rates.

Under the Exchange Programme, COCOBOD plans to issue longer-term bonds with an aggregate principal amount of approximately ¢7.93 billion. These bonds, designed to align with the programme’s terms outlined in a comprehensive set of documents, including an Exchange Memorandum, Trust Deed, and Agency Agreement, are expected to offer improved terms and conditions for investors.

The Exchange Memorandum, dated July 14, 2023, provides crucial details regarding the exchange process, while the Trust Deed, entered into between COCOBOD and Consolidated Bank Ghana Limited (CBG) as the trustee for bondholders, outlines the rights and obligations of the parties involved. Additionally, an Agency Agreement has been established by COCOBOD, CBG (as the bond trustee and paying bank), and the Central Securities Depository to oversee key aspects such as transfer, calculation, and registration of the Bonds.

Upon acceptance of offers, holders of the Cocoa Bills will receive a diversified portfolio of five different bonds. The principal amount of the bonds will be rounded down to the nearest ¢1.00, equivalent to the principal amount of the Cocoa Bills tendered, with any accrued and unpaid interest due on the Cocoa Bills also factored into the exchange.

The bonds, set to mature on a staggered basis from 2024 to 2028, will provide investors with attractive investment options across varying time horizons. This diversification strategy serves to cater to the preferences and risk profiles of a broad spectrum of investors.

In a letter addressed to all Cocoa Bill holders, COCOBOD’s chief executive outlined the rationale behind the Exchange Programme, highlighting the potential benefits it offers, including improved funding costs, enhanced liquidity management, and the optimization of the organization’s debt portfolio.

COCOBOD advises all Cocoa Bill holders to carefully review the Programme Documents and seek professional advice from dealers, investment advisers, or other financial experts before making any investment decisions. The Exchange Programme is open for submission of offers from July 14, 2023, until 4 pm on July 31, 2023, unless an extension is granted by COCOBOD at its sole discretion and with the prior approval of the Securities and Exchange Commission.

It is important to note that once an offer is made, it becomes irrevocable and cannot be withdrawn, except in limited circumstances outlined in the Exchange Memorandum.

The announcement by the COCOBOD, issued solely for informational purposes, does not constitute an invitation to exchange for Cocoa Bill holders. The invitation to participate in the exchange is exclusively made in accordance with the Exchange Memorandum.

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