Cash shell Cholet Investments is acquiring One Delta for £1.7m in shares.
Cholet originally looked to acquire waste-to-energy companies but none of these were suitable for a reverse transaction. One Delta still falls within the investment remit of the company.
One Delta was founded in 2008 by former MediaZest boss Sean Reel and Phil Dale. The business started out supplying flood protection products (via the website www.instantsandbags.com) and has subsequently moved into recycling plastic materials for other products. Revenues are currently small and One Delta is pinning its hopes on three new products: a security fence, mobile, anti-ballistic ground force protection systems and a flood barrier. One Delta hopes to gain a contract for the security fence from the Olympic organisers.
These products use powder impression moulding (PIM) technology licensed from Aim-quoted Environmental Recycling Technologies (ERT). There are specific licenses for each of the three products and they last at least 20 years. ERT will get royalties based on net selling price - 2% for the ground force protection system and flood barrier. There are minimum royalty levels but the amount for 2011 has been waived. At the moment One Delta does not manufacture the recycled was plastic material but it has the option to do so. One Delta has developed some patents of its own.
Cholet is raising £276,000 at 8p a share, the same price at which the shares are being issued to the shareholders of One Delta. The cash will help to pay the costs of the deal and the net proceeds will be £33,500. Broker Merchant Securities will reinvest part of its fees into shares.
In June, £150,000 was raised from a placing at 5p a share. The shares were suspended on 25 November because Cholet had failed to find a suitable acquisition. At the suspension price of 4.75p, Cholet was valued at £240,000. The highest the share price has been this year is 7.5p.
At the end of September 2011, the net asset value was 5.2p a share and there was £310,000 in the bank. Cholet had returned £7m to shareholders during the previous year.
Cholet will change its name to One Delta. Reel will become executive chairman but he has waived his salary of £15,000 for the first 12 months.
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