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FG’s N28bn Alape agribusiness sold to cash-strapped company

By Emeka Anaeto. Economy Editor

THEre were indications that the Federal Government’s sale deal transferring its USD100 million (N28 billion)  Alape Staple Crop Processing Zone (SCPZ) in Kogi State to a Nigerian Company may be threatened by funding stress as the Nigerian company which took over the assets few weeks ago have just announced a financial results indicating insolvency.

In its 2015 audited financial results submitted to the Nigerian Stock Exchange last week, the Nigerian company, Union Dicon Salt Plc, UDS, reported that it earned zero revenues for the financial year, which is the second consecutive year it ended with no earnings from its operations, fuelling the concern that the company may be in technical insolvency.

Note 24 of the audited financial statements indicates that the company made a loss before taxation of N2,632,000 during the year ended 31 December 2015, and as at that date its current liabilities exceeded its current assets by  almost N1.0 billion.

Moreover, the company had a negative shareholders’ funds of N1.2 billion.

According to its external auditors, BDO Professional Services, “these conditions along with other matters indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern, unless the company’s bankers continue their financial support and the shareholders introduce additional capital not only to wipe out the negative shareholders’ funds but to enable the company operate profitably.”

UDS continued to make losses just as it had only  N137,000.00 in cash as at the end of 2015, a situation that buttressed the auditors’ statement alluding impending threat to its status as a going concern.

It was against this backdrop that the Federal Ministry Of Agriculture and Rural Development struck a deal approving UDS to take-over the government assets as the new core investors replacing Cargill, a United States based multinational agro-industrial giant.

Speaking after a meeting with UDS officials, Audu Ogbeh, the minister of Agriculture and Rural Development, said “I am glad to see that a Nigerian company is taking over this very important project, and is championing the indigenous development of agribusiness.

“We are not going to engage in policy somersault. We are carrying on with the great idea of SCPZ and we are adding even greater ideas. We are carrying on as we now produce what we call the green alternative: that alternative being agriculture, since oil and gas are unstable sources of income”.

The company’s management stated “It is a remarkable opportunity to develop the agribusiness space in Nigeria from a fully indigenous perspective. Union Dicon is listed in the Nigerian Stock Exchange, and it is a wholly Nigerian company…..we are grateful for the support given by the Honourable Minister, and the Agriculture Ministry, after careful consideration of our proposal. Their detailed understanding and focus on new capital investment, import substitution and job creation really impressed us and allows Union Dicon Plc to move forward confidently in a willing and positive partnership.”

Neither the ministry nor the company stated the amount paid for the take-over in the public communications. Also the future investment plans were not disclosed.

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