DIGICUT has taken a number of positive steps to turnaround its operations including the appointment of new team leader, steps to access locked up IPO proceeds by end of 1st quarter of 2021 and reorganisation of its Board of Directors.
DIGICUT has announced that the collapse of GN Savings and Loans has locked up nearly 50 percent of the proceeds from its IPO, which was conducted in the first quarter of 2018.. The funds were placed with the GN Savings and Loans, which faced challenges that resulted in the revocation of its licence by the central bank.
Digicut Production and Advertising PLC (Digicut) is a full-service advertising agency and public relations consultancy. It made its debut on the Ghana Alternative Market (GAX) on April 11 2018, raising GHc 2.9 million as part of its initial public offering (IPO). A portion of the proceeds was used to retire old company debt, while the rest of the proceeds (specifically, GHc 1.4 million) was placed on a call account with GN Savings and Loans (GNSL, previously GN Bank).
In 2019, Digicut ran into cash flow challenges as several clients were not able to pay their outstanding receivables. The company was also unable to access the GHc 1.4 million of its IPO proceeds placed with GNSL due to the bank’s liquidity challenges, which was further compounded by the revocation of the bank’s license by Bank of Ghana in August 2019.
The company’s tight cash-flow condition was exacerbated by the corona virus pandemic (COVID-19). The lockdowns of Accra / Kumasi, and later the whole country, brought Digicut’s business to a standstill in the second quarter of 2020. On the back of the above difficulties, Digicut placed almost all staff on indefinite leave effective May 2020.
“Efforts by management to recover the company receivables and locked up IPO proceeds have not yet been successful,” the company claims in an official statement. “However, we are positive that these will be recovered for the benefit of the company and its objectives. These and other difficulties had also affected the timely completion of the 2019 company audit”.
There have been several recent developments at Digicut to turn the operations and finances of the company around positively.
A new management team, led by Manish Padhiar was brought in January 2021 to replace William Kofi Iden. The team is working on a plan to revamp and restart the company’s operations, including resolving all regulatory and listing issues.
Manish Padhiar brings more than eight years of corporate strategy and operations experience in both Ghana and the United States. He most recently served as a strategy consultant with an African business conglomerate, where his projects spanned mobile money, plastics manufacturing, and banking operations. Previous experience also includes consulting for pharmaceutical and biotechnology companies in California and teaching integrated science at an SHS in rural Ghana. Manish holds an MBA and a MS in Foreign Service from Georgetown University (in Washington, DC) and BS in Microbiology, Immunology and Human Genetics from the University of California, Los Angeles (UCLA).
In January 2021, Digicut secured some external funding to restart basic operations and reconcile its asset base. The company also completed a rebranding project, funds of which should help the company complete the 2019 and 2020 audits and revamp strategic operations to begin the new phase of Digicut.
Over the last few months, significant progress has also been made with the Receiver of GNSL and Consolidated Bank of Ghana (CBG) to regain access to Digicut’s GHc 1.4 million (of the IPO proceeds) placed with GNSL. Management is hopeful of receiving these funds by the end of the 1st quarter of 2021.
Board of Directors
Digicut’s Board of Directors is currently being reorganized to support the company’s new strategic direction and ensure adequate corporate governance to protect investor funds.
The Board consists of Joseph Kusi-Tieku, John Sterlin, and Victoria Aligboh. The company intends to add other directors, including advertising industry veterans in the near future.