Safeway Agro, one of the leading fishing farming businesses in the country, has assured its shareholders of the safety of their investments, indicating that the company plans to take some drastic measures to address its liquidity challenges.
Although, it is currently facing liquidity challenges due to operational problems that has resulted in delays in the repayment of invested capital and interest to the investors, the company says there was no cause for alarm.
“We are liquidating our assets in the real estate’s business in order to pay our investors. Our asset in the real estate business is enough to pay all our investors if sold at a fair market value,” said a statement signed by Jim Walter Foster, Chief Executive of Safeway Group.
Addressing some concerns of the investors over the delays in payments, the statement noted that funds from the income of the Tilapia business was invested in the real estate operations as part of measures to generate more value and yield for the investors due to the challenges facing the fish farm.
In view of the urgent need to pay the investors, it said the assets have to be liquidated, adding that moneys realised would be disbursed fairly to ensure each investor receives their invested capital and a fair interest on their investment.
In addition, it noted that the company would soon call the investors to a general meeting to review the high interest rate which range between 80 to 100 per cent in order to make payments more sustainable and realistic.
In addition, the statement indicated that although Safeway Agro was unable to meet current local demands for tilapia, “we will enter into market agreement to export a portion of our produce. This will enable us generate foreign exchange needed to protect Safeway Agro against foreign exchange risk”.
“Just as we acquired our own hatchery to guarantee our regular supply of fingerlings, we are also increasing other local content to reduce importation of foreign fish farming inputs,” it added.
The company solicited the support of cooperative investors and partners to develop an aqua culture system capable of supplying the country’s protein need, with the belief that it could be at exciting interest rates to the investors without making losses.
While citing major successes at accomplishing its core mandate over the past four years, such as the establishment of a first-class tilapia hatchery with current capacity to produce about 250 million fingerlings per year valued at about GHS60 million, it also admits having challenges.
“The peak of our challenge is our inability to generate sufficient cash flow to pay all our co-operative investors as scheduled. As an organisation, Safeway has conducted business re-engineering and has identified the causes of our problems and has marked the way forward,” the statement explained.
According to him, the problem started when the company encountered a panic withdrawal of investments due the folding up of a number of its competitors, creating the perception that the Safeway was also going to collapse.
In addition, he said the high interest rates on the invested capital, the foreign exchange losses due to the depreciation of the local currency and the high cost of production, affected the tilapia operations.
“We generated enough cash from our initial fish production even after paying our co-operative investors. The surplus cash from our production together with inflows from our new cooperative investors were available and had to be re-invested quickly to ensure sufficient returns to our investors. Since our bankers did not have the capacity to offer us the same interest of 100 per cent that we offered our investors from our normal operations, we, therefore, settled on the real estate sector as the best alternative,” he said.
By Times Reporter