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ReEnergy Group

  • BY: Andrew Hore |
  • POSTED: 09/05/2008 |

ReEnergy Group has signed heads of terms to sell its only trading subsidiary. 

ReEnergy failed to raise additional £1m in order to finance its working capital needs. It had already closed its desalination business in the US.

This has led it to agree to sell its waste separation business Estech Europe to an unnamed company quoted on the main market. It will receive £1.9m, depending on due diligence.  Estech lost £3.9m in 2006.

Prior to the final agreement of the deal the acquirer will finance ReEnergy’s daily cash burn of £5,800, up to a maximum of £180,000 - although the cash will be deducted from the final price.

According to a trading statement on 31 March “Estech has signed a consortium agreement and preferred bidder letter with VT Group plc and Wakefield MBC for the provision of a 150,000 tonne per annum autoclaving facility“.

VT Group could possibly be the potential acquirer.

The acquirer has exclusivity until 8 June 2008 but a binding agreement is expected by 15 May. The deal requires shareholder approval. They will also either approve a new investing strategy for the company or possibly a winding up and return of cash to shareholders.

ReEnergy joined Aim on 30 December 2005. It raised £6.54m via a placing at 75p a share, valuing the whole company at £28m. In April 2006 it raised a further £12.75m at 30p a share.

The shares edged up 0.25p to 4.625p on the news of the potential sale. That values the company at £4.71m. That is a large premium to the cash that ReEnergy is likely to be left with after the disposal. 

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