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STC up for sale
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- Parent Category: Our Country
- Category: Business & Finance
- Created on Wednesday, 19 September 2012 00:00
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STC up for sale
The head office and transport yard of Intercity STC at the South Industrial Area in Accra is up for auction to defray a US$3,783,935 debt owed the Prudential Bank in the latest twist to problems that have plagued the company.
The facility was used as collateral for the loan.
Mr Abankwa doubled as the Managing Director of the Prudential Bank at the time he engineered the loan agreement as the Chairman of the STC Board.
Auction notices posted at vantage points on the facility read: "Notice of sale of a property (STC) No. 1 Adjuma Crescent, Ring Road West, South Industrial Area, Accra. Property of Intercity STC Coaching Ltd. Ordered by the D/S Sheriff Commercial Court".
The notice said the public auction would be done by Goodwill Mart, a licensed auctioneer, on October 3,2012.
When the Daily Graphic visited the STC Yard Tuesday the place looked unusually deserted, with a bus that was scheduled to leave at 6 a.m. setting off at 8:30 a.m. instead.
When contacted, the Head of Administration and Finance of the company, Mr Nuhu Janskabar, said the total debt stock of the company currently stood at GH¢43 million with accruing interest.
Workers of the company, according to the Union Chairman, Mr S.K. Martin, had not been paid their salaries for the past three months.
Mr Martin said that had been the situation in recent years, as the company currently had only 35 buses on the road.
He said Intercity STC had been forced to shut down its Accra-Kumasi route, which used to be the busiest.
Most of the workers with whom the Daily Graphic spoke appeared frustrated by the situation, not knowing the future of the company.Mr Anane Frimpong, who is with the Accident and Insurance Division of the company, said the 45 buses which were purchased with the Joan facility could not last more than two years because they had not been tested before being purchased.
He said as a result, the company did not get value for the capital invested.
"The tradition here is that we order for prototypes of buses when we want to purchase them but the fleet of buses we bought did not go through that process so they were not up to our specifications and started breaking down just a week after we started using them," he said.
He also said arbitrary interference from various governments was responsible for the near-collapse of the company.
The Intercity STC has been in debilitating stress since 1997 when it was first divested under the Divestiture Implementation Programme (DIP).
The Social Security and National Insurance Trust (SSNIT) currently owns 80 per cent stake in the company, with the government controlling the remaining 20 per cent.
The trust, in March 2012, told the government, through a letter copied to the STC Company Secretary, about its willingness to offload its shares, saying it was not interested in the debt-ridden firm.
The woes of STC, which was valued at GH¢7.2 million in 2000, began with the acquisition of the company by VANEF.
VANEF, unable to pay fully for the stated value of STC by the Divestiture Implementation Committee (DIC), approached SG-SSB Bank for a loan to enable it to acquire the largest public transport company at the time. SSNIT acted as a guarantor for the loan and subsequently the name of the entity was changed from STC to VANEF STC Limited.
Though VANEF operated the entire fleet of the transport company, it failed to pay the loan, leaving SG-SSB with no choice but to recoup the loan from SSNIT, the guarantor.
SSNIT, in turn, activated a clause in an initial agreement with VANEF, re-possessed the company and renamed it Intercity STC Coaches Limited in 2001.
However, since the acquisition, SSNIT has neither injected any significant capital into the company nor restructured its finances, operations and administration. This led to a steady decline in the company's fortunes and erosion of its working capital, plunging it into a mountain of debt.
The situation is compounded by the fact that the minority shareholder- the government, virtually runs the company, with SSNIT assuming a secondary role.
The net worth of STC dwindled from GH¢1O.9 million in 2000 to negative GH¢6.2 million in 2009 and its finances will continue to remain in the red if the company is not salvaged.
From: Daily Graphic/Ghana
