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United Cacao issues bond to pay portion of December 2016 salaries

Staff Writer |
Peru-based cacao plantation company United Cacao said that the board has entered into an exclusivity agreement and a non-binding heads of terms with certain existing investors in the company.

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United Cacao said the exclusivity agreement will expire on February 15, and is intended to provide the company and the investors with the opportunity to structure and negotiate a longer-term financial solution to historical and prevailing liquidity problems.

It said the non-binding heads contemplate the possible issuance of additional 7% convertible bonds and new ordinary shares of $0.001 each.

"In the interim, the company has today entered into a subscription agreement pursuant to which it has issued a total of $0.25m nominal of secured bonds at a subscription price of $0.60 per $1 nominal.

"The subscription price reflects the suspension of the company's shares from trading on AIM and the suspension of the secured bonds from trading on the NEX Exchange Growth Market," the board said.

It said the $0.15m proceeds will be used exclusively 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.

That is a statutory obligation of the company which needs to be met by no later than 6 January 2017 in order to avoid possible serious adverse consequences.

The company confirmed it paid the interest due on 31 December in relation to the secured bonds on 3 January.

"The board has authorized the immediate reduction of the labour force at CDPN to 250 field workers from 450 field workers, resulting in anticipated monthly savings of approximately $85,000.

"Despite the new issue of secured bonds, the company is experiencing significant financial constraints and operating challenges."

The directors said they believe that the firm's current payables, before paying the salaries referred to above, exceed $1.25m.

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