“Multi-Trex Integrated Foods Plc (“Multi-Trex” or “The Company”) is a public limited liability company incorporated in Nigeria on 30^th  November 1999. Multi-Trex started business as a private cocoa merchant; buying cocoa beans from a select group of local suppliers for export to customers mainly in Europe.

 

In 2003, the company took advantage of the Nigerian government’s policies on non-oil export to expand its business operation by going into processing of cocoa beans into semi-finished industrial products i.e. Cocoa Liquor, Cocoa Butter, Cocoa Cake and Cocoa Powder.

 

To achieve its objectives, the company exclusively hired the production facility of Nigeria’s first cocoa processing plant for a period of two (2) years. Following the success of its manufacturing operation, the company resolved to build its own first cocoa processing factory with an annual capacity of 10,000 metric tonnes (MT).

 

Working with top-rated technical experts and cocoa processing equipment manufacturers from Europe, the company’s factory was completed in 2005 and commissioned on February 1^st, 2006 by the then President of Nigeria, Chief Olusegun Obasanjo, GCFR”.

 

(Source: Company’s Official website)

 

Investadvocate in its usual manner sought to find out more about the Multi-Trex Integrated Foods Plc and its operations.

 

In this interview with PETER OBIORA of investadvocate, Yusufu Isiaka, Managing Director/Chief Operating Officer (MD/COO) of the Cocoa Processing Company discusses on issues relating to its year 2008 Private Placement, planned listing of the company on the Nigerian Stock Exchange (NSE), dispatch of shares certificates and payment of dividend to investors of the company as projected in its Placement Memorandum.

 

Others issues discussed include the strategy of the company in competing in the industry, on its product offering, plans to commence production of consumable Cocoa products, the company’s current capacity of production, change of name, future outlook amongst others. Excerpts:  

 

Review of Multi-Trex Private Placement (2008)

 

The Company Multi-Trex came from clearly articulated ideas and minds. I want to also believe that the company has the hands of God in it.

 

We didn’t just sought to raise funds through Private Placement in year 2008, we came to the Placement Market to realise one of our key objectives; when we set out to be a Processor of Cocoa, we decided at achieving four principle things; which we consider to be key drivers to our success.

 

One of which was to make sure that as an organisation, we do not operate at low capacity. Many Processing organisations had started before us, and we realised that those among them that approached the business from the proper perspective, were handicapped heavily by the fact that they operated below optimum capacity.

 

We took the decision prior to the time of the Placement; that we would not operate below capacity like I said earlier on.

 

Also, we affirmed to ourselves that to do this business well, we have to ensure that we get our capitalisation right. Additionally, we knew that we are going to go beyond processing Cocoa beans for the main reason that Cocoa and its intermediate products generally referred to as “ingredients” by practitioners, are heavily centrally controlled in terms of pricing as a result; margin is always very small.

 

Therefore, it brings us back to our first objective of operating at the right capacity.

 

Let me go to the fourth one; which is to make sure that we look after our supply base; if we operate at the right capacity, with adequate capitalisation and value addition; by venturing into consumer products which are chocolate or Cocoa based, Multi-Trex would make Nigerians begin to eat from the fruits of their labour.

 

Apart from that, they would be self dependent to a large extent with our main raw material supply; we believe that the rest of it becomes standard business issues to be looked after. For instance Human Capital and other business management issues, with all these, Multi-Trex will get to the promise land.

 

Thus, we sought to raise funds via Placement in year 2008 like I affirmed earlier to fulfill one of our four cardinal objectives which was to get the right capital and expand our capacity; which was at that time 15,000 metric tonnes of Cocoa beans; and with the funds we had intended to raise at the Private Placement, we sought to increase our capacity to 60,000 metric tones; which is what we considered to be the right capacity.

 

Reviewing the experience at this time is to say that we are discussing mixed feelings; because we will recollect that the period was a time we would term a transitional period.

 

This was so because just before we embarked on the Placement, about two weeks before, it was possible for anybody to sell the most mundane product, approach the Capital Market for fresh funds and be full of cash.

 

Like I said before, only two weeks before we came to raise fresh Capital via Placement that the entire global financial crisis began; and we were not insulated.

 

As a matter of fact, recollecting the experiences of far bigger organisations that almost could not even recover the cost of coming to raise fresh funds from the Capital Market and had to go back; could send shivers down the spine of any businessman.

 

We believe that the modest success we made of that after about two months or thereabout was because we had more Nigerians who actually believe in the long term nature of our business. To put it specifically, we only succeeded in raising 40 percent of the projected N6.0 billion we had sought to raise via the Placement.

 

FACTS CHECK:

 

“Multi-Trex in June 06 2008 opened application to select investors to raise funds via Private Placement. The company offered 2.0 billion Ordinary Shares of 50 Kobo each at N3.00k per share. Leading Issuing House was Skye Financial Services Limited and Joint Issuing House was Goldman Assets Management Limited. Capital assets Limited were Financial Advisers to the Placement”.

 

On Dispatch of share certificates to investors of the Placement

 

I am able to say to you with all sense of honesty that not only that the certificates were all dispatched to investors of the company, but were dispatched not later than early last year (2009).

 

Investors, who end of the first quarter of last year, have not received their certificates could only be that they have addresses that could not be located. And we have informed a few of them that had to ask of their share certificates to go back to the issuing house through which they paid.

 

Apart from this, the latest information is that earlier this year 2010, we went further to appoint Registrars to whom we have passed names of all shareholders and evidences of certificates that were given to them. Our Registrars are Meristem Registrars Limited. Today, I am able to confirm that we have actually issued evidences in the form of share certificates to all those who invested in Multi-Trex Private Placement of year 2008.

 

I won’t hazard a guess really, but a lot of people in terms of number, most of those who invested in that period were either our staff or people who actually came in through them. However, in terms of valued, our Issuing Houses brought a bulk of the

40% realised. We allotted 100% of shares to those who took part in the Placement.

 

EDITOR’s PICK:

 

From the company’s official website, the shareholding structures are as follows: Industry Equity Limited has 1,762,997,858 billion units about 43.36%. Owofemi Oladimeji 629,925,000 units which translates to 16.92%, while Owofemi Monisola has 372,409,362 units representing 10% holding.

 

Others are Skye Financials Services Limited with 364,593,183 units indicating 9.79% equity stake and Goldbanc Assets Management Limited having 152,742,278 units showing 4.10% stake.

 

While other Nigerian Investors has 439,825,939 units about 11.83%, showing a total of 3,722,493,620 units of shares.

 

Projected dividends to investors

 

Talking about projections, the first place to start is that if everyone will know what will happen the next day, definitely, we will all be wise men. Like I affirmed earlier, everything you find in the Placement Memorandum, were projections for those period; founded primarily on the fact that this factory; which we are seeing today before year 2009 would have been built.

 

If I am saying that I was only able to secure 40% of what I required, what naturally should follow is the fact that we had to alternatively look for funds to be able to complete our project. Also, putting alternative facilities in place in the year 2008 era coupled with the global economic crisis and in year 2009; when the Banking reform in Nigeria commenced; you can estimate how easy it would be to switch gears and move over from your original plans of raising funds via Placement to Banks at a time were all of them without exception were faced with the task of meeting up Regulatory reforms.

 

What I am saying in essence is that for the fact we were unsuccessful with the Private Placement, represents a huge dislocation in the assumptions that we relied on in our projections in the Placement Memorandum.

 

EDITOR’s NOTE:

 

Forecast Offer Statistics in the Placement Memorandum made available to investadvocate, showed in page 5 that Multi-trex had projected to offer investors of the company a dividend of 10 kobo, 15 kobo and 20 kobo for years 2009, 2010 and 2011 respectively.

 

It is not different with other organisations, if anybody will tell you in year 2008 that today, about five Banks would be on offer you would not believe it. I am saying that quite a number of changes outside the control of management; sometimes even beyond the sector we are operating and beyond national economy; contributed to our nothing meeting up with our dividend projections.

 

Also remember that it is not just about building a factory, we have finished doing this and there are a couple of things yet to be done; but we still need to go back and source for funds.

 

In our case being a Cocoa Processing company, we need a lot of money to be able to run the factory. If you put all of these together, the only thing it has taken out of us is the fact that we would have to wait longer to be able to put these basic fundamentals that would generate that revenue that we had anticipated.

 

To put it mildly, it became impossible to realise those policies for factors that were not difficult for both investors and discerning minded people in this economy to appreciate. However, we have taken our time to invite our shareholders and explained this to them, why some of the things we projected could not have been achieved.

 

As I speak with you today, whatever you sought in year 2009, can only be things that would be looked at in year 2011; what the situation has done was to postpone our projections not less than about two years. Also our projections were to be driven by capital; which unfortunately we could not raise enough.

 

On Multi-Trex listing on the Nigerian Stock Exchange

 

We have secured approval from the Nigerian Stock exchange, and about a couple of days ago, I was assured that by the end of the week, we would have the final approval from the Securities and Exchange Commission (SEC). Based on our plan, we were meant to be on the Exchange first week of November year 2010.

 

On listing price

 

We would list at N3.00 per share; this was what we proposed and the Exchange had considered it. They have reviewed our proposal and have approved N3.00. We would list the entire shares of Multi-Trex; we would list about 3.4 billion Ordinary Shares of 50 Kobo each at N3.00 per share.

 

We are listing only by introduction, only the statutory minimum that would be offered to the investing public on that day. I was told by our Stockbrokers that we would offer on that day 10% of whatever shares of the company to be listed.

 

FACTS CHECK:

 

“The company offered 2.0 billion Ordinary Shares of 50 Kobo each and from the shareholding structure available on it’s website, Multi-Trex showed a total of 3,722,493,620 units of shares; considering the holdings of the major shareholders mentioned above”.

 

Current capacity of Multi-Trex

 

Currently we are at 65,000 Metric tones per annum compared to the 15,000 we were before this time.

 

EDITOR’s PICK:

 

Multi-Trex had affirmed in its Placement Memorandum that the purpose of raising the funds was to enable it expand the capacity of its Cocoa processing plants from 10,000 metric tonnes to 60,000 metric tonnes per annum.

Review of the company’s performance

 

Our current performance is about strategy, we have always told our investors that the vision we have in Multi-Trex is not like you find in most sectors of the Nigerian economy, we are not in a short; but a long term business.

 

 

This would be passed to several generations and as such, the kind of investors we have always wished are those that understand the trade. Cocoa does not grow in two months; it will take its time. People that you find around Cocoa are experienced. What we have always said to ourselves is that we must get the platform right and this was the reason I affirmed earlier that part of our agenda is to actually acquire the right capacity.

 

When you do this, there are many things that you achieve that the small players can’t achieve. That was the reason you see us investing. In the last five years of Multi-Trex, we have been investing and we would hardly encourage investors who are speculators to invest in this kind of business. If you are not prepared to be a long term investors, then you have no business here. This is the mentality we have here, if and when we have our resources settled, the rest becomes a lot easier to cope with.  

 

On Multi-Trex products

 

For most of the last five years, we have always exported Cocoa Butter, Cocoa Cake, Cocoa powder and sold locally Cocoa powder to other manufacturers; especially to Nestle Nigeria Plc. We set up not with a view of stopping at the semi-finished product, because they are still to be sold to manufacturers; just like Nestle I mentioned earlier to be used for the edible products.

 

Ultimately, we would want to venture into consumable products. We are working very hard to make sure that we begin to let Nigerians see and feel Multi-Trex around their dinning tables; which were one of the reasons we went for a Private Placement.

 

Change of name

 

This was in year 2009, as soon as we closed the year 2008 Private Placement; we were by law meant to immediately convert to plc; because we had shareholders funds.

 

Multi-Trex had about 500 shareholders and we could not keep that amount of shareholders and still be a Limited Liability Company. Following this, we immediately sought the necessary approval to be a Public Liability Company (PLC).

 

On the other hand is because we knew quite clearly that we were not going to be a typical Cocoa Processing Factory; we were going into full manufacturing, it becomes appropriate for us to let our name reflect what we do; therefore, we converted to PLC and we changed the company’s name; rather than be Multi-Trex Investment; which was a misnomer; when most people see our name outside of our factory, they tend to have it at the back of their mind if we are dealing with an investment organisation and we know we are not.

 

So, it was an opportunity for us to make the change in name to Multi-Trex Integrated Foods Plc and to also ensure that our name reflects the status of the number of the shareholders that we have. Again, we wanted our name to be an Integrated Foods Company that we intend to go into shortly; also to ensure that the name investment is removed from our name. We did all the above to take care of these, it all happened in year 2009.

 

Outlook of Multi-Trex in the next five years

 

We project that we would have a successful company that would be a household name in the Nigeria economy. We project that Multi-Trex would be an investors delight in the next five years. Above all, we see a company that would have contributed hugely to the Nigerian employment market.

 

EDITORS PICK:

 

The company plans to utilise cocoa powder output from its grinding plant to produce cocoa-based consumer products such as chocolate drinks, chocolate dry mix and chocolate bars. It is expected that the company’s manufacturing facilities to support the production of these new products will be on stream later this year.

 

Also, it has been confirmed on the company’s official website that on Friday 29 2010, Goodluck Jonathan, President of the Federal Republic of Nigeria would be officially commissioning the ultra modern Multi-Trex Chocolate and Dry Mix Automated Plants.

 

 

End