St Peter Port Capital wants FibreGen to buy its 25% stake in Emerald Bio-Energy.
St Peter Port has a put option requiring wood pellets producer FibreGen, which was formerly known as Libra Natural Resources, to buy the stake for £4m – double its purchase price. FibreGen does not have the cash to do this and it is negotiating the payment with St Peter Port. FibreGen says it is likely to have to sell its stake in its Chinese joint venture to help finance the purchase.
FiberGen shares dived 21.375p to 9.125p, valuing the company at £1.95m.
Emerald was set up to take control of all the company’s wood pellet businesses. On 2 March 2007 it was described as wholly-owned. In May 2007 St Peter Port bought out the minority shareholders in the wood fibre businesses and when they were acquired by Emerald it took a 25% stake.
Aim-quoted St Peter Port invested £2m in Emerald. It is a closed-ended investment company, which joined Aim on 16 April 2007, when it raised £75m at 100p a share. The Guernsey-based company provides pre-IPO financing to companies in their last investment round before flotation. It was launched by broker Shore Capital and chief executive Tim Childs. Bob Morton is chairman and Peter Griffin is a director.
When FibreGen set up Emerald it was going to spin it off as a separate quoted company. It subsequently decided to retain the wood pellet business and dispose of its other investments. This meant that St Peter Port wasn’t going to have any other realistic exit than selling its stake to FibreGen.
St Peter Port shares have slipped back to 70.5p and it has already disposed of some of its investments. It has realised more than £11m from investments and in its results for the year to March 2008 it promised “further liquidity events” in the second half of 2008.
On top of this, FibreGen is having to unwind the April acquisition of wood pellets producer Coeur d’Alene Fiber Fuels Inc. The acquisition’s bank has modified its working capital facility which will require FibreGen to provide additional security – which it says it can’t provide. FibreGen intends to hand the company back to its original owners in return for the FibreGen shares they were issued.
All this means that FibreGen’s 2008 revenues will be much lower than expected.
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