Dunedin craft chocolate company OCHO has announced it is seeking voluntary liquidation with "no prospect of achieving future profitability under the current business model".
In a statement, OCHO Limited said the new board notified staff and shareholders that the company is "unable to trade out of its current financial situation" and have requested a special meeting to consider and pass a resolution to appoint a liquidator.
"While OCHO Limited is currently solvent and can continue to trade for a short period of time, the new board hopes that winding up the company will present an opportunity for the business to be sold as a going concern," OCHO Limited board chairman Pete Lead said.
"The best outcome for shareholders would be that the OCHO brand and its assets are bought by someone with a passion for craft chocolate and a desire to see chocolate making continue in Dunedin, although this is not guaranteed."
It's a huge blow for the chocolate company which grew rapidly in Dunedin in 2019, following the closure of Cadbury's factory in March 2018.
Lead said the current board has only been involved for up to six months and has taken this long to "fully understand the situation and explore all available options".
"This is not a decision that has been made lightly and the new board is mindful what this announcement means for the 11 highly talented and dedicated OCHO staff. Staff are our priority, and we will work to ensure they continue to be paid until a liquidator is appointed," Lead added.
Company faced challenges 'from the start' - founder
The original OCHO chocolate company was launched in 2013 by Liz Rowe and operated as a small, craft chocolate company until 2017, when OCHO Newco was incorporated for the purpose of a crowdfunding campaign. The campaign raised $2 million from 3549 investors.
OCHO founder Liz Rowe said she is sad to hear of the board's decision, but not altogether surprised.
"The crowd funding in 2017 and the support from so many people who bought shares in OCHO was exciting and humbling. However, the company structure set up hasn't proved to be the easiest model to work with. In essence, there was a big company structure being managed by a very small staff.
"Combine that with a commitment to buy cocoa beans direct from the farmers and an uncompromising approach to making the best quality craft chocolate and, with the benefit of hindsight, it's not hard to see there were some challenges for the company from the start."
OCHO Newco changed its name to OCHO Limited in 2018 — the current name of the company.
She resigned as general manager in early 2019 to give the then-board the opportunity to appoint someone with the skill set needed to take the company from the start-up phase into a period of growth.
In 2021, OCHO launched another equity crowdfunding campaign and raised a further $498,000 from existing and new investors.
"While I haven't had any involvement with OCHO on a day-to-day basis since 2019, I have followed progress with interest and remain the largest shareholder with approximately 8.5% of shares. I intend to support the board's proposal to wind up the company," she said.
As of May 29, 3738 shareholders and 27,806 shares are on issue. The majority of shares were bought at $100 per share.
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