TIDMWAS
RNS Number : 0548F
Wasabi Energy Limited
17 April 2014
Wasabi Energy Limited (Subject to Deed of Company
Arrangement)
("Wasabi," "the Group" or "the Company")
17 April 2014
NOTICE OF MEETING AND COMPANY UPDATE
PROPOSED CHANGE OF NAME
The Directors of Wasabi Energy Limited (Subject to Deed of
Company Arrangement) (the "Company" or the "Group") advise that, in
accordance with the Deed of Company Arrangement ("DOCA") announced
on 28 February 2014, a General Meeting of the Company will be held
at Level 25, Bourke Place, 600 Bourke Street, Melbourne, VIC, 3000,
Australia on 16th May2014 at 11.30am (AEDST) (the "Meeting").
A Notice of Meeting and explanatory statement have today been
posted to shareholders and is available on the ASX and the Group's
website www.wasabienergy.com.
The business of the Meeting is to implement the DOCA and to
allow for the recapitalisation of the Company in order to preserve
as much value in the Group as possible through its ownership of the
Kalina Cycle(TM) Technology and its investment in Wasabi New Energy
Asia and other entities.
The Company will also propose a resolution at the Meeting to
change the Company's name to Enhanced Systems Technologies
Limited.
The Meeting will, if all resolutions are approved, result in the
Company reducing its debt from Au$16 million (and an additional
Au$5.7 million of contingent debt) to Au$500,000 remaining to the
first ranking secured creditor. It will also allow for
approximately Au$1 million of new funds to be lent into the Company
(also on a secured basis) ahead of a proposed rights issue to
shareholders, which is expected to be announced in the second
quarter of 2014 (the "Rights Issue"). These funds will allow the
Company to continue to operate and fund the underlying activities
of the Group whilst the DOCA is being implemented. These funds are
all expected to be converted at the time of, and on the same terms
as, the Rights Issue. The terms of the Rights Issue are yet to be
finalised and further details of this process will be announced as
appropriate. The Company is working to ensure that the Rights Issue
is fully underwritten to provide certainty of funds.
During the recent restructuring period, the directors have
performed a review of the business and have determined to
restructure the Group to provide a more appropriate strategy for
the Company to create value for its shareholders. As a result, the
Company will be focused on industrialisation of the Kalina
Cycle(TM) Technology through a new subsidiary, Enhanced Power
Technologies ("EPT"), and will consolidate the company's IP and
knowhow into this company specifically focused on building
commercial relationships with global EPC companies, with the
objective of achieving near-term scalability of the technology. The
Company will also continue with the development of Wasabi New
Energy Asia Limited ("WNEA").
The Company previously stated its aim was to be an Independent
Power Producer (IPP) and to have 25MWe of owned power generation
under construction or in operation by 2015. Following the review of
the business, the Company intends to focus on industrialisation of
technologies, and in particular its patented power cycle
technology. The Group is not now aiming to become an IPP, however
as the Group and, in particular, WNEA , moves through its business
plan and the technology is deployed through major partners, the
Group may achieve indirect ownership of significant power
generation in the longer term, without the high capital cost.
Operational Update
The following update provides a short summary of the Group as at
this time. Negotiations in respect of some of the Group's projects
and determination of financing requirements remain ongoing and
additional details will be provided by the Company as required or
in a disclosure document anticipated to be issued in conjunction
with a Rights Issue to all shareholders.
Wasabi New Energy Asia Limited (WNEA).
In November 2012, the Company announced that it was establishing
WNEA to own:
1. 50.5% of Shanghai Shenghe New Energy Resources Science &
Technology Co Ltd ("SSNE"), the current Kalina Cycle(TM) licensee
for Mainland China, Taiwan, Hong Kong and Macau;
2. 100% of the royalty income stream from SSNE currently
attributable to its use of the Kalina Cycle(TM); and
3. A new Kalina Cycle(TM) licence covering Japan, South Korea,
Indonesia, Philippines, Thailand, Vietnam, Malaysia, Singapore,
Myanmar, Cambodia, Laos, Brunei, North Korea and Mongolia.
Wasabi owns 66.7% of WNEA and has a loan to WNEA of
approximately $6 million.
Over the course of 2013, SSNE continued to develop its EPC
projects with particular emphasis on the building of a 4 MWe Kalina
Cycle(TM) plant at the Sinopec Hainan refinery as well as a 7.5 MWe
Enhanced Rankine power plant at China Building Materials Group's
Guizhou cement plant. These projects are continuing and SSNE is
actively engaging with parties for new projects in a number of
sectors.
While the Wasabi administration process did not directly affect
WNEA, it has required ongoing dialogue with all stakeholders in
order to maintain WNEA's development over the Administration
period. WNEAs fundraising process is continuing. WNEA will continue
to work with Canaccord Hong Kong for its initial capital raising
and IPO on the Singapore Catalyst Exchange. The Chairman of Wasabi,
Mr John Byrne, and the directors of WNEA and in particular Mr Yu,
who is also CEO of SSNE, are the key management personnel working
to deliver the funding and listing of WNEA.. The intention is to
complete the listing of WNEA as soon as possible during 2014. The
final issue price has yet to be determined but an indicative price
of 50c per share has been used in the marketing efforts to date.
The value of WNEA, if listed at $0.50 per share, will be $20
million to the Company based on its current ownership holding
WNEA has a loan facility from China Shiny Holdings Limited
("China Shiny"). China Shiny has a guarantee in respect of the full
amount owing under the loan facility and therefore has a right to
make a claim directly against the Company. The maximum drawdown
amount of the loan facility is RMB 18,000,000 and the Company's
maximum contingent liability to China Shiny has been admitted by
the Administrator as AUD $3,479,546.85 and the maximum number of
Shares that it may be required to issue in respect of the same is
6,959,094 (which would be issued pursuant to the DOCA as to 2
shares for each $1 claimed). In addition, there is a further
contingent liability in respect of the Additional Guarantors of the
China Shiny loan for which a further 4,300,000 Shares may be
required to be issued pursuant to the DOCA as to 2 shares for each
$1 claimed. Ideally the Company would like to be able to resolve
WNEA's liabilities to China Shiny, thus enabling the Company to
become the secured lender to WNEA.
Enhanced Power Technologies
Following completion of the strategic review into the operations
of the Company and discussions with a number of strategic partners,
the Company has decided to restructure its power division by
establishing Enhanced Power Technologies, a 100% owned subsidiary
focused on the commercialisation of the Kalina Cycle(TM) technology
in all areas outside of Asia. EPT will consolidate the company's IP
and knowhow into a company specifically focused on building
commercial relationships with global EPC companies, with the
objective of achieving near-term scalability and adoption of the
technology. EPT will work collaboratively with major industry
partners to provide specialised engineering and IP development
opportunities for those partners within their sectors. In the near
term EPT will be funded by the Company, however it is anticipated
that as collaboration agreements are formalised with EPC partners,
EPT will be self-funding as it will generate revenues through
licensing, collaboration and engineering fees.
Notwithstanding the above, the EPT team will also encompass both
the existing opportunities in Imparator and work of the engineering
team at Recurrent in the US, however these existing opportunities
will be held in their current structure as set out below.
Imparator Green Energy Plc
In 2011, the Company established Imparator Green Energy Plc, and
its subsidiary Imparator Enerji, ("Imparator") to own the Kalina
Cycle(TM) license for Turkey and to develop a waste heat and
geothermal business utilising the technology. The main project
within Turkey was the Tuzla geothermal power project in which
Imparator held an option to purchase 50% of the project.
In December 2013, due to the failed fundraising by the Company
and subsequent administration process, Imparator was unable to make
the final option payment required within the time frames of the
option agreement.
Imparator retains certain rights in relation to the project and
is continuing to discuss the situation with its associates in
Turkey, as well as with the owners of the Tuzla project, however
there is no certainty that Imparator will be able to re-negotiate
the purchase of an interest in Tuzla. Imparator will source
external funds for this purchase should the negotiations be
successful.
Imparator has undertaken diligence on a number of other projects
within Turkey and there remain opportunities to participate in
other projects where using the Kalina Cycle(TM) technology can
provide significant advantages.
Wasabi currently owns 100% of Imparator and is considering its
options with regards to partners and investors in order to deliver
on the development opportunities in Turkey. Imparator will
undertake its own funding process to progress its business in the
future, which may result in Wasabi's ownership of Imparator being
diluted.
KCT Power/Recurrent Engineering
Wasabi owns 100% of KCT Power, which has an engineering team
through its wholly owned subsidiary in the US, Recurrent. KCT and
Recurrent own the numerous patents under which the Kalina Cycle(TM)
technology has been developed and licensed around the world.
KCT issued an exclusive license to FLSmidth in 2011 for the
cement industry and has been working closely with them on two
projects, the 8.6MWe DG Khan Khaipur Cement plant in Pakistan and
4.75MWE Star Cement in the UAE. Both of the projects have taken
longer than expected to reach final commissioning due to various
issues with the procurement and installation of items, however the
Kalina Cycle(TM) aspects of both of the projects were delivered on
time by KCT/Recurrent. The DG Khan Kalina plant has been operating
as part of the commissioning process, however, the expected waste
heat from the cement process has not yet become available. Despite
this, the power generated by the Kalina Cycle(TM) system is in line
with the projected performance based on these reduced
parameters.
KCT is in discussion with FLSmidth in relation to milestone
payments for the DG Khan plant and has been receiving payments for
commissioning support at the Star Cement plant.
Other Projects
The Company has not progressed the refurbishment of the Husavik
Power Plant as quickly as anticipated and is considering the most
appropriate structure for completing this project. EPT will
co-ordinate the process with KCT to achieve a beneficial outcome
for the various stakeholders in Husavik. Further details will be
provided on this in the future.
In Germany, the Taufkirchen4.3MWe geothermal combined heat and
power project, focussed on district heating, is progressing
following receipt of the required regulatory approvals in August
2013. The owners of the project anticipate completion of this
project in 2015. The Group's involvement in this project is through
the licence of the Kalina Cycle(TM) technology and an engineering
contract.
In Japan, the engineers from Recurrent completed their
engineering contract with GERD in relation to the 50kWe Ecogen
micro power plants. Discussions are ongoing as to future projects
in Japan.
Other Assets
Wasabi maintains an ownership in additional assets. These
include CleanTeq Holdings Limited (ASX:CLQ), Lignol Energy
Corporation (TSX-V:LEC) and Aqua Guardian Group Limited.
CleanTeQ, a water treatment and resource recovery company, has
recently closed a placement in March 2014 for approximately $4.6
million at 5c per share. This placement allows it to strengthen its
balance sheet and to fund the delivery of their pipeline of new
projects. The major lender to CleanTeq, Mr Robert Friedland,
participated in the placement to maintain his existing interest in
CleanTeQ at 19.9%.
Lignol, a producer of biofuels, biochemicals and renewable
materials from waste biomass, has recently purchased 100% of
Territory Biofuels Limited which owns a 140 million litre per annum
Biodiesal refinery in Darwin, Australia. In conjuction with this
purchase, Lignol has signed a Memorandum of Understanding with
Milio International for a JV. Under this proposed JV, Milio will
provide funding for up to 120,000 tonnes per annum of feedstock and
provide the marketing and sales for the biodiesel produced. This
facility is expected to be up to $25 million per annum at full
capacity. Lignol have also signed a Memorandum of Understanding
with M-Energy Co Ltd as a key technology partner for the restart of
the Territory Biofuels plant. M-Energy have a patented
pre-treatment plant that allows the use of low-cost, sustainably
certified high free fatty acid waste feedstocks
to produce biodiesel. M-Energy have 3 operating biodiesel plants in Korea.
Aqua Guardian Group, the owner of the AquaArmour(TM) product, is
in discussions with a major partner for operations in Australia,
Southern Africa and South America. Further details in relation to
this will be provided in the near future.
Augut Clean Energy Pty Limited
In May 2013, the Company announced it had entered into a
subscription agreement with Augut Clean Energy Pty Limited (Augut)
for a placement in the Company as well as into WNEA. In July 2013
the Company had still not received funds from Augut and issued a
notice of demand for the monies. Subsequently Augut was placed into
liquidation and it is unlikely that any value will be received in
relation to the proposed placement.
Wasabi had intended to own 62% of AAP Carbon which was to be the
Kalina Cycle(TM) licensee for Southern Africa. However, the issue
of the license and integration of the AAP Carbon team into the
broader Group did not proceed following delays in the establishment
of projects in Southern Africa with parties such as ArcelorMittal,
TATA Steel and others. Wasabi retains approximately 23% of AAP
Carbon and will not be providing any funds to it. AAP remains
active in Southern Africa and may provide value to the Group in the
future.
The Deed of Company Arrangement
As outlined in the Notice of the Meeting, the DOCA proposes
that:
-- the existing Shares will be consolidated such that creditors
will hold 90% of the share capital of the Company subsequent to
implementation of the debt to equity swaps required under the DOCA,
with every 765 Shares in issue being consolidated into 1 Share;
-- the majority of the creditors of the Company will convert
each $1.00 of debt owed to them into 2 Shares;
-- each new Share to be issued to a creditor cannot be sold,
transferred or assigned until the earlier of:
o six months from the DOCA Commencement Date; or
o 30 days after the closing of the Future Rights Issue (described below);
-- Salida Accelerator Funds S.a.r.l. will remain a secured
creditor for half of its debt, and accept Shares for the other
half; and
-- Minor creditors (those whose debt is less than Au$2,000 and
which total approximately $13,000) will receive a distribution
anticipated to be 100 cents in the dollar instead of Shares from an
amount of Au$475,000(1) to be made available to the Administrator
by new lenders.
The arrangement with creditors cannot proceed unless
Shareholders vote in favour of the Resolutions which relate to the
debt restructure and included in the Notice of Meeting posted to
shareholders today. Unfortunately, the only alternative to the
implementation of the DOCA is a liquidation of the Company. The
Administrators estimate that Shareholders would receive nothing on
a liquidation.
(1) The amount of Au$475,000 to be made available to the
Administrator and minor creditors is included in the larger some of
Au$1,000,000 to be provided by new lenders and is not an additional
amount being lent to the Company.
Share Consolidation and Issue of New Shares to Creditors
If Shareholders approve the share consolidation, the number of
Shares in issue will reduce from 3,718,761,160 to 4,861,126. Any
fractional entitlements will be rounded up.
If the share issues proposed are approved by Shareholders, the
total number of shares issued will be 43,817,988 and accordingly,
the number of Shares in issue will increase from 4,861,126 to a
maximum of 48,679,114. The maximum number of new Shares to be
issued is also subject to the receipt and adjudication of final
proofs of debt from creditors and also includes the maximum number
of Shares, being 11,259,094, which may be issued to satisfy any
call on the guarantees outstanding with regard to China Shiny. If
all outstanding debts are converted to equity, the new Shareholders
will hold in aggregate 90% of the issued capital of the Company.
Subject to shareholder approval, if the Company undertakes a
placing in addition to the debt to equity swap, up to a further
5,000,000 ordinary shares and 5,000,000 options could be
issued.
On a fully diluted basis, there would therefore be up to
58,679,114 ordinary shares on issue.
All previously issued options in the Company have expired.
Following the Share consolidation and if issue of all of the New
Shares are approved by Shareholders, and the China Shiny Holdings
Shares are also issued, the Shareholders owning more than 3%** of
the Company are expected to be:
Shareholder Number of Shares Percentage of
in Company Shares held
---------------------- ----------------- --------------
Niyazi Onen* 10,239,900 19.1%
---------------------- ----------------- --------------
China Shiny Holdings
Ltd** 6,959,094 12.9%
---------------------- ----------------- --------------
Difference Capital
Funding Inc 6,495,781 12.1%
---------------------- ----------------- --------------
John Byrne (and
related entities) 3,171,232 5.9%
---------------------- ----------------- --------------
Yu Jianmeng*** 2,582,250 4.8%
---------------------- ----------------- --------------
*The New shares proposed to be issued to Niyazi Onen are in
relation to the Loan note issued by the Company for the purchase of
the Option over 50% of Tuzla as announced on 4 April 2012.
**If the contingent liability owed to China Shiny Holdings
Limited is crystallised, China Shiny Holdings Limited would have
6,959,094 representing 12.9% of the Company. These shares may be
issued to the guarantors of the China Shiny loan. The ASX has
granted a waiver to allow these shares to be issued for up to 36
months from the date of the meeting. The waiver is subject to the
following conditions:
1 For any annual reporting period during which any of CSH Shares
have been issued or remain to be issued, the Company's annual
report must set out in detail the number of CSH Shares issued in
that annual reporting period, and the number of CSH Shares that
remain to be issued, and the basis on which those securities may be
issued.
2 For any half year or quarter during which any of the CSH
Shares have been issued or remain to be issued, the Company's
interim report and quarterly activities must include a summary
statement of the number of CSH Shares issued during the reporting
period, and the number of CSH Shares that remain to be issued, and
the basis on which those shares may be issued.
***The Additional Guarantors of the China Shiny Loan may also be
issued, collectively, 4,300,000 if their guarantees are called by
China Shiny. This would represent a holding of 8.8% of which Yu
Jianmeng would hold 2,582,250.
Following the Share consolidation and issue of New Shares to the
Shareholders, the Shares held by the Directors of the Company are
expected to be:
Director Number of Shares Percentage of Shares
in Company held
------------------ ----------------- ---------------------
John Byrne 3,171,232 5.9%
------------------ ----------------- ---------------------
Robert Reynolds 84,168 0.16%
------------------ ----------------- ---------------------
Malcolm Jacques 72,616 0.14%
------------------ ----------------- ---------------------
Robert Vallender 69,387 0.13%
------------------ ----------------- ---------------------
Admission of Shares to trading on AIM
Subject to approval of the DOCA, the revised share capital of
the Company will be 37,420,020 Ordinary Shares (the "Revised Share
Capital"). Application for admission of the Revised Share Capital
to trading on AIM will be made and admission is expected to take
place on 16 May 2014, however trading in the Revised Share Capital
is not expected to commence until there is clarity of the Company's
financial position and the interim results for the period ended 31
December 2013 have been announced. The figure of 37,420,020 does
not include the 11,259,094 Ordinary Shares which may be issued if
the contingent liability owed to China Shiny Holdings Limited and
the guarantors is crystallised.
Indicative Timetable
The following timetable sets out the manner in which it is
anticipated the Share consolidation will occur (as set out in the
Listing Rules) if the Share consolidation is approved and the
Shares resume trading immediately following the meeting. The date
on which the Revised Share Capital will resume trading has not,
however, been confirmed and therefore the timetable is subject to
change:
Date* Event
--------------- -----------------------------------------
Friday, 16 May Shareholder meeting and notice
2014 to ASX that shareholders have approved
the share consolidation
--------------- -----------------------------------------
Monday, 19 May Last day for trading in pre-consolidated
2014 Shares
--------------- -----------------------------------------
Tuesday, 20 Trading in consolidated Share on
May 2014 a deferred settlement basis
--------------- -----------------------------------------
Monday, 26 May Last day for registration of transfers
2014 on a pre-consolidation basis
--------------- -----------------------------------------
Monday, 2 June Deferred settlement trading ends.
2014 New Holding Statements despatched
--------------- -----------------------------------------
*The above timetable is indicative only and subject to change.
Any changes will be announced on the ASX.
Director Loan
It was announced on 27 February 2014 that John Byrne, a director
of the Company intended to participate in the lending syndicate
that provides the Au$750,000 of initial funding to the Company.
This initial funding is to be used to fund the Company whilst it
goes through the DOCA and fundraising processes. It has been
determined that a revised and total amount of Au$1,000,000 will be
lent to the Company however Mr John Byrne will not be participating
in the lending syndicate. The Loan is a secured loan, with interest
at 8% per annum and will convert into New Shares in the Company at
the same price and on the same terms as a proposed fundraising by
the Company in the near future.
Interim Accounts
In accordance with a Class Order, and as announced on 14 January
2014, if required, the Company is given until 30 June 2014 to
report to members and lodge its report for the half year ended
December 2013, being six months after the date of the appointment
of administrators. The Company was, however, required, pursuant to
Rule 19 of the AIM Rules for Companies to issue its interim results
by 31 March 2014. As the Company was not able to meet this AIM
reporting requirement it therefore will remain suspended until its
interim results have been published and until the long term
financing of the Company, which is expected to be achieved by the
Rights Issue, has been secured.
Change of registered office
Wasabi Energy Limited (Subject to Deed of Company Arrangement)
advises that its new address is:
Level 1, 114-116 Auburn Road, Hawthorn, Victoria, 3122,
Australia.
For further information, please contact:
Wasabi Energy Limited
John Byrne, Executive
Chairman +61 (0)3 9236 2800
Cenkos Securities - London
Financial Advisor, Broker
& NOMAD
Beth McKiernan/Neil McDonald +44 (0) 131 220 6939
This information is provided by RNS
The company news service from the London Stock Exchange
END
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