25 Jan 2017 12:43
25th January 2017
United Cacao Limited SEZC
Corporate Update
United Cacao Limited SEZC (AIM: CHOC) (the "Company" or "UCL"), the AIM-quoted cacao plantation company based in Peru, provides an update following its announcement of 6th January 2017 regarding the resignation of Mr. Dennis Melka, the Company's former Chairman and Group Managing Director.
The Company's directors are continuing to review the circumstances surrounding Mr. Melka's resignation.
The Board's concerns include the following:
US$ 2,000,000 Working Capital Facility: In apparent conformance with the AIM rules, on 30th September 2016 the Company announced the establishment of a new US$ 2,000,000 unsecured working capital facility from Mr Melka and Graeme Brown (another former director of the Company) ('the Loan Agreement') as a related party transaction with the publication of the Company's Interim Report for the period to 30th June 2016 (the "2016 Interim Accounts").
According to the terms of the Loan Agreement, UCL was to be entitled to draw down up to US$2.0 million in tranches from September 30th 2016 to the re-payment date, December 31 2017. The 2016 Interim Accounts also contained a going concern statement that "Management considers that the Company has sufficient funds for the foreseeable future that is for at least twelve months from the date of this document".
The Board has since discovered that between 19th July 2016 and 27th September 2016, Mr. Melka advanced to UCL and UCL's operating subsidiary, Cacao del Peru Norte SAC ("CDPN"), the US$ equivalent of approximately US$827,059, in the aggregate, in 11 separate transactions without notifying them to the Board or disclosing them to the market. At that time, Mr. Melka was both Chairman and Chief Executive of UCL.
It was not disclosed that the Loan Agreement was used to document advances already made of approximately US$ 827,059 by Mr Melka to UCL.
On 4th January 2017, without reference to the Board, Mr Melka instructed CDPN's legal representatives in Peru to sign 6 separate loan agreements with other companies which the Board believes are connected with him to re-classify a number of advances previously made by such companies under the Loan Agreement as direct loans to CDPN. These loans contained negative pledges and other terms which were detrimental to the ability of UCL and CDPN to raise further finance.
Mr Melka resigned on 5th January 2017. Following extensive negotiation, on 18th January Mr Melka instructed the legal representatives of the beneficiaries of each of these loan agreements to assign their interests to UCL. Each of the loans made under these loan agreements has now been repaid by the issue of further equity in CDPN to UCL.
PAPEC Program: The Board has recently been made aware that previous representations by the Company with regards to the Group's Programa Alianza Producción Estratégica Cacao ("PAPEC") program may be inaccurate. The Board believes that the size of the PAPEC program is only approximately 70 Hectares (HA) and not 194 HA as has been stated in the Company's interim statement for the period ended 30th June 2016.
The Company will make further announcements as appropriate once the Board has completed its review.
For more information please visit www.unitedcacao.com or contact:
United Cacao Limited SEZC | +1 345 815 2710 |
Constantine Gonticas | |
Beaufort Securities (Joint Broker) | +44 (0) 20 7382 8300 |
Jon Belliss / Elliot Hance | |
Kallpa Securities SAB (Joint Broker) | +51 1 630 7500 |
Ricardo Carrion | |
Tavistock (PR Adviser) | +44 (0) 20 7920 3150 |
Niall Walsh / Jos Simson |