Extract of Minutes of Meeting of the Chair7man's Policy Committee
held on Tuesday, 4th October 1988.
ETRICTED
266. BATCO - CAMEROONS
Reference: TEC Minute TD.212/C.55 of 30th September 1988
The CPC noted that Bastos had continued to improve its
market share but largely in the lower contributing CFA 200
segment of the market. Current projections showed a
trading loss of CFA 1562 million in 1988 with break-even
in 1989 assuming no price increase.
The CPC also noted that the TEC did not support a "walk
away" strategy for Bastos. The CPC agreed that in view of
BATCO's current exposure in the Camoroons, such a strategy
w@& unattractive. However, the CPC had severe
reservations about the outlook for Sastos without an early
price increase for its products and an improvement in its
product mix. In particular, the CPC was not convinced
that prospects for the control of smuggled imports,
opportunities for exports in the hingo-lid segment, or
future co-operation with M. Bollore were in themselves
reasons to continue to support the company.
Accordingly, the CPC recommended that before a commitment
was mad* to restructure the company:-
1. Bastos should immediately be advanced sufficient
funds to most the tax unique demand of CFA 883
million and, as and when considered essential by the
TEC further funds of up to CFA 1164 million should be
advanced to cover the cash requirements of Bastos to
pay tax unique and local creditors up to the and of
1988"
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2. The cAmER operation should be closed at a cost of
C2.7 million less the proceeds from the realisation
of assets of up to rl.8 million.
3. Urgent consideration should be given to achieving a
*&it and lease-back of the Yaounde site as soon as
was practicable; and
4. BATCO should consider and report back to the CPC by
void November 1988 on the consequences of going to
government with an ultimatum to the effeit that
unless government support was received for a price
increase or a change in excise credit arrangements
sufficient to ensure the profitable operation of
Sastos, the company would be liquidated.
In making these recommendations, the CPC recognized that
to delay a restructuring of the balance sheet of Bastos
until these issues had been addressed might prompt the
further lour. of Bastos' current overdraft facilities of
CFA 5644 million (C10.5 million). In that event, SATCo
niqht need to provide equivalent funds to Bastos to
support its operations. The CPC requested that in that
event, BATCo would advise the CPC before any iuch funds
were provided.
(Mr. Bromley, Mr. Heywood, Mr. Cann&r)
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