Cameroon sorting out to recapitalize Alucam with the aid of three European financial institutions

The aluminium company in Cameroon is presently sorting out with a group of three European financial institutions to recapitalize Cameroon Aluminium Company (Alucam), the only primary aluminium producer in the CEMAC zone.

As per our report from the Technical Commission for the Rehabilitation of Public and Para-Public Sector Enterprises (CTR), the in support European financial institutions are the International Tropical Conservation Fund (ITCF), the Franco-German Financial Group BHF and Investment Bank BPI.

Provisionally, there are no details of the funding mechanism selected by the state of Cameroon, the exclusive stakeholder of Alucam, nor on what is anticipated from each financial institution. 

The CTR explains, “In 2020, Alucam’s financial performance plunged the company in bankruptcy, notwithstanding the merger with Socatral. A recapitalization is necessary to avoid an early dissolution.” 

The figures published by the commission, it says “Alucam’s equity dropped by 240.8% between 2019 and 2020, going from XAF5.9 billion in 2019 to -XAF8.3 billion in 2020.”

However, since that date, the company’s equity has been below half its XAF21 billion share capital.

Cameroon has time until 2022 to recapitalize Alucam to bring its equity to at least half of its share capital, which is around XAF10.5 billion, according to Article 665 of the Ohada Uniform Act on Commercial Companies and Economic Interest Groups. As per Article 667 of the same act, beyond that timeline, "any interested party may take legal action to request the dissolution of the company.”

Alucam’s recapitalization will authorize the company to functionalize at full control, besides evading legal issues, whereas concurrently, considering the environment in the aluminium and alumina markets due to its price taker compelled to agree to the prevailing prices in international markets.

The CTR also added, “The Company’s operating loss dropped by 32% in 2020 (from XAF16 billion to 10 billion) but its high operating expenses remain a concern. For instance, its personnel expenses represent 160% of its added value. In addition, in 2020, the company recorded a XAF14.393 billion net loss.”