London Stock Exchange Suspends Trading of United Cacao


London Stock Exchange Suspends Trading of United Cacao

As reported by Chain Reaction Research, the London Stock Exchange (LSE) reported that United Cacao Ltd. Managing Director and former Chairman Dennis Melka resigned from his post on Thursday, January 5, 2017. He resigned after United Cacao’s directors “unanimously resolved” to seek his “immediate termination”.

United Cacao began trading on the London Stock Exchange’s Alternative Investment Market (AIM) December 2, 2014. Its AIM initial public offering raised $10 million before expenses by issuing 5 million ordinary shares at 128 pence a piece. Proceeds from its initial public offering financed United Cacao’s plantation operations and expansion. Based on the placing price, United Cacao’s market capitalization at this time was about £23.6 million.

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United Cacao is currently the only publicly listed permanent crop estate in Latin America.

As of June 30 2016, United Cacao had 1,837 ha planted. This made it the largest pure-play cacao estate in Latin America. 1,643 ha is planted on its corporate estate. Another 194 ha is planted via its small-farmer program called Programa Alianza Producción Estratégica Cacao (PAPEC).

As of September 24, 2016, United Cacao reported initial sales to date of 605 kg of dried fermented beans sold to an agent for a premium Swiss company. At this time, its investors guidance suggested that its first direct commercial sales are expected to conclude by July 2017.

Moving forward, United Cacao has requested rights to expand its operations by deforesting 96,192 additional ha of the Peruvian Amazon. But United Cacao has faced concerns regarding its business activities in Peru.

  • In December 2014, the Government of Peru ordered United Cacao’s Cacao del Perú Norte S.A.C., Plantaciones de Ucayali S.A.C., and Plantaciones de Pucallpa S.A.C. to cease operations for potentially illegal deforestation.
  • In February 2016, the Government of Peru confirmed that these three United Cacao companies still lacked their legally required permits.
  • In April 2016, Roundtable on Sustainable Palm Oil (RSPO) ordered United Cacao’s related company, Plantaciones de Pucallpa, to immediately stop operations. RSPO cited evidence that the company had violated the rights of Indigenous Peoples. RSPO also stated that the company was in non-compliance with Peruvian environmental standards and permits.
  • In May 2016, the LSE received clear evidence that United Cacao and its direct subsidiary, Cacao del Peru Norte and its two related companies, Plantaciones de Pucallpa and Plantaciones de Ucayali, had possibly illegally deforested 11,000 ha of the Peruvian Amazon. The complaint stated that each of these three Peruvian companies “derived significant financing” from United Cacao’s initial public offering on from the LSE to fund their potentially illegal deforestation activities.
  • In November 2016, days before the Plantaciones de Pucallpa faced a final judgment by the Roundtable on Sustainable Palm Oil’s complaint panel for possibly illegally clearing 5,000 ha of land owned by numerous Peruvian communities, Plantaciones de Pucallpa quit participating in RSPO.


Aerial photograph captures approximately half of Cacao del Peru Norte’s plantation in Tamshiyacu, Peru. This subsidiary of United Cacao began operating in this area during mid-2013 (EIA March 2015).

United Cacao’s and its related companies potentially illegal deforestation practices may violate the LSE’s listing standards. Likewise, these activities may also violate the LSE’s public commitments to the UN Sustainable Stock Exchanges Initiative. The LSE joined the UN Sustainable Stock Exchanges Initiative in a ceremony ringing the opening bell June 2, 2014. The UN initiative supports enhancing corporate transparency on environmental, social and corporate governance issues, including deforestation and Indigenous Peoples rights.



Ringing the opening bell of the LSE to celebrate LSE joining the UN Sustainable Stock Exchanges Initiative, June 2, 2014.

On December 22, 2016, United Cacao’s Board of Directors announced that they were seeking short-term funding to manage their immediate liabilities, including paying for payroll due December 31, 2016. They also stated there were reviewing reducing operational activities at its plantation in Peru. They were also trying to raise cash by entering into a sale and leaseback transaction of its heavy equipment located on-site in Peru.

On January 5, 2017, Strand Hanson Limited resigned as nominated adviser to United Cacao and as NEX Exchange Corporate Adviser. Strand’s resignation resulted in suspension of trading of United Cacao’s shares on LSE AIM. In accordance with NEX Exchange rules, United Cacao’s $6,080,000 7 percent secured convertible bonds issued in October 2015 due June 30, 2019 were also suspended from trading. Trading will resume pending the appointment of a new Corporate Adviser.

Since these announcements, United Cacao’ share price has declined 55 percent from 117.5 pence to 50 pence.

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Gabriel Thoumi, CFA, FRM works as Director Capital Markets at Climate Advisers where he manages global financial analytics focusing on mitigating systemic climate risk while advising on “greening” capital markets. He has 18 years of experience managing and deploying frameworks to improve global capital markets sustainability through risk mitigation and return enhancement. Previously, for Calvert Investment Management, he valued global equity, index, and fixed income portfolios and their component positions in the utilities, energy, materials, chemicals, and financial sectors. He worked on quantitative index construction and asset allocation strategies. He engaged Fortune 500 CEOs on approaches to mitigating climate risk using financial risk management tools. He led initiatives to improve financial accounting of exchange-listed products and incorporated natural capital into financial tools. He has also worked at Morgan Stanley's carbon offset company, Wells Fargo Capital Management, and American Express. He is an adjunct at John Hopkins University.

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