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United Cacao Ousts Managing Director; Warns On Financial Constraints

[ 06 Jan 2017 08:14 ]

LONDON (Alliance News) - United Cacao Ltd SEZC said Managing Director and former Chairman Dennis Melka resigned from his post on Thursday, after the company's directors "unanimously resolved" to seek his "immediate termination".

The Peru-based cacao plantation company's non-executive directors will assume management oversight pending the appointment of a full-time replacement.

In a separate statement, United Cacao said it has entered into an exclusivity agreement a non-binding heads of terms with certain investors, as it warned it is experiencing "significant financial constraints and operating challenges".

The exclusivity agreement will expire on February 15 and is intended to provide the company with the opportunity to structure and negotiate a longer-term financial solution to its liquidity problems.

The non-binding heads of terms contemplate the possible issuance of additional 7% convertible bonds and/or new shares of USD0.001 each.

In the interim, United Cacaco has entered into a subscription agreement under which it has issued USD250,000 of secured bonds at a price of USD0.60 per USD1 nominal of secured bond.

The USD150,000 proceeds will be used to pay a portion of the December 2016 salaries due to employees of the company's Peruvian subsidiary Cacao del Peru Norte SAC, the balance of which is intended to be paid from existing cash balances.

United Cacao added that it has "authorised the immediate reduction" of the labour force at CDPN to 250 field workers from 450 field workers, resulting in anticipated monthly savings of around USD85,000.

United Cacao estimates its current payables, before paying the salaries to CDPN's employees, to exceed USD1.3 million.

"Based upon a careful analysis of its options, the board is no longer confident that the company will be able to meet its financial obligations in the absence of a longer term funding strategy. The company will therefore continue to negotiate further funding with the investors as contemplated by the non-binding heads," the company said.

Shares in United Cacao last traded at 51.50 pence.

By Karolina Kaminska; karolinakaminska@alliancenews.com; @KarolinaAllNews

Copyright 2017 Alliance News Limited. All Rights Reserved.


United Cacao Ousts Managing Director; Warns On Financial Constraints - Alliance News

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