The Board of Directors and Management of the Tema Oil Refinery have explained the rationale behind using the sole sourcing module to lease the refinery to Torentco Asset Management.
According to them, before Torentco will become the considered entity for the lease three parties were presented with the proposal for the rehabilitation of the refinery.
Management said: “Following the submission of proposals and then physical presentations from the various parties the consensus decision of the board was to pursue the proposal made by Decimal Capital, a financial advisory firm established by Ghanaian professionals which set up a new special purpose vehicle (SPV) for the specific purpose of entering into the lease to allow its funding/crude oil supply partners to interact with TOR.”
Decimal was the only one among the three entities that had a long-term crude supply partner in the form of one of the world’s leading oil & gas trading companies, according to TOR Management in a release on June 24, 2016.
“The Decimal proposal was also the only structure that did not result in TOR taking on any more debt on its balance sheet – it is fair to state that TOR did not, and continues not, to have any capacity to raise debt without the support of government guarantees,” it added.
How Torentco became part of the deal
As part of the concerns raised about the credibility of Torentco Asset Management (TAM) is the issue of sole sourcing and the fact that it has no credibility and no history.
Explaining the decisions to use that module, TOR recounted a series of events that led to it as follows:
“In November 2022 one of the Decimal partners was arrested on his way back from London in relation to an alleged offense that dated back to 2016. This civil case had been settled but unbeknownst to him a criminal case was unscaled during his visit to London.
“Such an occurrence caused the board of TOR to take a step back and to evaluate how best to proceed with a proposal that in substance was deemed to be the most solid and sustainable solution for TOR.
“After consultation with our stakeholders, and with a keen eye on compliance, it was determined that if we were to continue with the proposed solution, the Decimal principal in question would have to be withdrawn from any further involvement in the transaction, either as a director or a shareholder.
“The collective wisdom was that rather than withdraw the individual from Decimal, a new entity be established with no history of the individual’s involvement. Torentco was the result of this decision, and it was advised that the mechanism for the replacement of Decimal with Torentco would have to be an application for sole sourcing approval.
“It is important to note that throughout the period of negotiations with Decimal/Torentco, management has been attempting to develop alternative options to test against the proposed Torentco structure. The Board has not been presented with any other credible expressions of interest providing a solution for TOR.
“Despite the imminent completion of the Torentco transaction TOR has negotiated the option to, at any point, replace Torentco should a more attractive solution emerge.
“The Torentco structure must be viewed as an immediate opportunity to rehabilitate the plant and resuscitate TOR, a very much needed “injection of Oxygen” to a distressed and ailing entity.
“The proposed transaction in fact provides TOR and the government the opportunity to review the longer-term strategic options for TOR in an atmosphere of stability and continuous operation.
“It does not represent a sale of TOR or some kind of irreversible commitment to anyone. In the process, TOR will once again become a going concern and a more attractive proposition to any long-term strategic solution,” It noted.
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