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Business News of Monday, 30 June 2014

Source: B&FT

STC braces for changes

The board of Intercity STC Limited’s board of directors met last week to discuss the questionable payment of GH?2.4million by the Social Security and National Insurance Trust (SSNIT) to Vanef consortium on the former's behalf.

The Managing Director of STC last Tuesday confirmed the meeting to the B&FT: “The board is meeting to discuss the issue and other plans for the company," said Mr. Nuamah Donkor who assumed office few months ago.

The meeting has been necessitated by a B&FT publication that revealed the majority shareholder of STC, SSNIT, paid over GH¢2.4million on behalf of Intercity STC (STC) Company Limited to the former owners of STC, Vanef Consortium, to settle a dispute when in fact Vanef rather owed STC over GH¢2.8million,

The payment was made by SSNIT in July and August 2011 to Vanef Consortium.

The company has over the past two years relied on its shareholders -- SSNIT (80%) and government (20%) -- to pay its numerous creditors and sometimes staff salaries.

Mr. Donkor is however optimistic that his team can turn the fortunes of the company around and wean it off shareholders' persistent bailouts to become profitable within the next eight months.

"We are putting plans in place to ensure the company moves to profitability within the next eight months," he said.

Other major issues believed to have been addressed at the meeting were the acquisition of new buses for the company, and development on the company’s landed properties located in major commercial towns and cities in Ghana and the West African sub-region.

Information available to the B&FT indicates that the company’s new management has secured an alliance arrangement with the automobile dealer in Germany for the supply of 50 new Citra buses.

Management has also successfully concluded negotiations for the supply of a number of Youngman buses from the Youngman automobile Group in China.

Under the alliance arrangement, STC as a business entity does not pay any money upfront for the buses -- nor does it acquire the fleet outright. It operates the fleet on behalf of its partners and the profit is shared between the two parties.

“We have successfully negotiated for 50 Citra buses with a company in Germany to be operated by STC on alliance basis. We are not paying any cash but the profit from the venture will be shared on a 70 -30 percent basis,” Mr. Nuamah Donkor told the B&FT.

The new buses, reliable sources indicate, come with fitted toilets, mini-bars and are fitted with Wi-Fi for free Internet access. The new management plans to develop some of its landed properties in major cities such as Cape Coast, Takoradi, and Kumasi into hostels and residential facilities that will also generate additional revenue and give the company a new lease of life.