A 2008 loan comes calling for FTN Cocoa at the worst possible time

A loan FTN Cocoa Processors Plc took out in 2008 – when global markets were still reeling from the financial crisis – is coming due this year, forcing the struggling Nigerian cocoa processor to confront a 16-year-old obligation just as soaring cocoa prices tighten cash flows across West Africa’s processing industry.

The Lagos-based company sources raw cocoa and other inputs and processes them into semi-finished goods such as cocoa liquor, cocoa butter, cocoa cake and cocoa powder and sells to confectionery manufacturers in Nigeria and abroad.

The company said in its latest financial report that it issued an 18-year, ¥500 million deep-discount bond to Daewoo Securities (Europe) in 2008, with the debt now “expected to be partly or fully repaid in August 2026.” The bond, which carries no coupon but a 4.375% yield to maturity, is “a direct, unsubordinated and unsecured obligation of the company,” according to the filing.

The proceeds from the bond, received in 2009, were used to fund FTN’s initial expansion. Sixteen years later, the maturity has emerged as one of the most consequential pressure points on a company already grappling with record cocoa prices, thin margins and constrained access to capital.

Cocoa Prices Tighten the Squeeze

FTN’s unaudited financial statement for 2025 show a business increasingly squeezed by the cost of raw materials. Cocoa beans, the company’s primary input, now absorb the bulk of revenue, leaving little room to cover energy, logistics, labour and financing costs.

Global cocoa prices have surged to historic highs following poor harvests, climate disruption and supply shortages. For processors like FTN, which operate on thin margins and have limited pricing power, the impact has been severe.

Unlike global trading houses, local processors cannot easily pass higher input costs on to buyers of semi-finished products such as cocoa liquor, butter, cake and powder without risking lost contracts. The result is a working-capital trap: more cash is needed upfront just to maintain production volumes.

To keep operations running, FTN disclosed that it accessed ₦3 billion in working-capital financing from the Nigerian Export-Import Bank (NEXIM) to source cocoa and other inputs.

“FTN Cocoa Processors Plc was privy to a working capital finance of ₦3,000,000,000 from NEXIM as a working capital finance to source raw materials,” the company said, adding that the facility supports the processing of cocoa into semi-finished products for export, including shipments to Hamburg, Germany.

The reliance on short-term funding underscores the strain created by rising input costs – and highlights the vulnerability of the business as it approaches a major debt maturity.

Managing a 16-Year Obligation

In its report, FTN outlined a plan to manage the maturing bond, saying there is “a commitment from OH Origins Global Commodities Inc. to settle the amount due and for it to be presented in the books of FTN as a non-current liability to be settled within two years.”

The arrangement effectively buys time, shifting the obligation away from immediate settlement while keeping it on the balance sheet. The bond has been booked in its original currency before conversion to naira at the prevailing exchange rate, the company said.

FTN also disclosed a $16.6 million convertible loan from OH Origins, noting that the loan will be converted at the spot exchange rate as defined in the agreement. “By the terms of agreement between FTN Cocoa Processors Plc and OH Origins Global Commodities Inc., the convertible loan… will be converted at the spot rate exchange,” the report said.

To support that conversion, the company said its management and board, with shareholder approval, plan to increase share capital to accommodate foreign investors, part of a broader strategy to resume operations at optimal capacity.