Zenergy Power should have £4m in the bank following the sale of assets, subject to closure costs, and it will become a shell.
Zenergy has not been able to secure orders for its fault current limiter (FCL) and Applied Semiconductor Ltd has offered to purchase assets related to this business, which were valued at £124,000 at the end of 2011, for up to $400,000. Applied also has an option to acquire Zenergy Power Pty Ltd for £1.
This will cut out the ongoing costs of this business to Zenergy and there will be a royalty stream of 3% of any future sales of products incorporating the technology. This lasts for six years. There is interest from buyers but it could take a long time to convert this into sales.
Applied has paid $200,000 (£127,000) for the first tranche of assets and the rest of the disposal should happen by the middle of July as long as Applied wants to proceed. Zenergy will no longer be exposed to a performance warranty on a past sale to Applied.
Shareholders will have to agree to this effective change in business for Zenergy.
The board is already looking at alternative businesses to inject into Zenergy and it has cash to invest.
There was £5.29m in the bank at the end of 2011. Although there should be £4m in cash after the disposal some of this will be eaten up by any costs of the closure of the FCL business.
At 3.38p a share, Zenergy is valued at £2.33m.
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