FibreGen has sold its Chinese joint venture to Aim-quoted Evergreen Securities in order to finance the purchase of a minority stake from Aim-quoted St Peter Port Capital.
This is a complicated combination of deals which by means mark the end of the transaction.
Evergreen is run by FibreGen’s former boss Peter Greensmith and it recently acquired FibreGen’s and other portfolios of cleantech company stakes. It is buying the 42% stake in the Chinese biomass business, which operates a 50,000 tons per annum biomass facility in Jiangsu province, for £300,000 in cash, a reduction of £200,000 in loans to Evergreen from FibreGen and stakes in HaloSource Inc - which was part of the portfolio acquired from FibreGen - and Waipuna Holdings, which was bought from Benjamin Goldsmith.
HaloSource is an antimicrobial technology developer that intends to use the technology to provide safe water and infection control. The 1.2% stake was acquired for £1.08m in shares in the original deal with FibreGen, then known as Libra Natural Resources. Waipuna is an alternative pesticides company and the 9% stake was valued at £2.9m when it was acquired by Evergreen.
FibreGen received 2.56m Evergreen shares in return for the investments it sold to the investment company.
FibreGen is paying St Peter Port Capital £4m for the 25% stake in wood pellets supplier Emerald Bio-Energy. FibreGen has paid £979,000 in cash, including £79,000 in interest and fees, with the other £3.1m deferred and payable by 22 July 2009. The deferred amount attracts an interest charge of 10% a year. The investments in HaloSource and Waipuna have been transferred to St Peter Port Capital. These investments will be transferred back to FibreGen if the deferred consideration is paid on time.
However, St Peter Port Capital may derive income from the investments by the way of a flotation, for example. This income would be subtracted from the amount owed by FibreGen. Any stake, or part of a stake, left when the deferred consideration is satisfied will be transferred to FibreGen. The two stakes were valued at £4m earlier in the year so they should cover the money owed but there is no guarantee that they are still worth that much - especially as they are unquoted.
The two deals weren’t well received. FibreGen also warned that it had limited working capital. It feels it has enough for its needs but this relies on cash from the sale of non-operational assets before the end of 2008.
FibreGen shares dived 2.5p to 3.625p. It is valued at £1.31m.
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