US power organisation comes to AgCert's aid


AgCert International, the Irish greenhouse gas emissions trader in receivership with debts of up to €95m, is to be rescued by US electricity generating group AES in a deal worth €27m.

The Dublin-based company, whose shares were withdrawn from the London stock market, said in February it would apply to the High Court for examinership, having fallen into difficulty meeting its obligations with its customers (Click Here).

AgCert is involved in trading gas emissions from firms that under-hit their emissions tariffs with those who exceed their limit. Last year, the company said the carbon offsets it generated were not enough to meet delivery obligations this year. Essentially, it has not produced enough emission reduction credits that it had already agreed to sell on to customers. That left customers seeking offsets at different prices than those offered by AgCert and they wanted the company to make up the difference.

Under the proposed rescue package, AES has agreed to write-off about €20m that it is owed by AgCert and to commit a further €7m to pay off other creditors. The US multinational will then take full control of the Dublin company.

Shares in AgCert were suspended at 0.68 pence, valuing the company just 1.67 million (€2.2m). The shares have lost 99pc of their value in the past year. The most recent results for AgCert - for the six months to end-June 2007 - show pre-tax losses of €28m on turnover of €2.47m.

According to documents with the courts, AgCert has a deficit of between €90 million and €95 million. Of this, €60 million is in the form of 'contingent liabilities' - which are debts that may or may not come to pass based on forthcoming events.

AgCert was founded in 2002 and listed on the London stock market in 2005 with a value of €400m. The company has a heavyweight board including Paul D'Alton, the former chief financial officer of Waterford Wedgwood; former Anglo Irish Bank chairman, Peter Murray and former EU Agriculture Commissioner, Franz Fischler. The company was set up by US venture capitalist XL TechGroup, which is its largest shareholder.

XL TechGroup said AgCert International plc has assigned to it all of the Irish firm's patents and patent applications, together with certain other intellectual property. The company said that AgCert has the right to buy back all of the assigned intellectual property for US$7.9 million plus interest and costs by Jan 4, 2009.

Last February, XL TechGroup had said it had agreed to pay US$17.8 million plus interest to US-based finance house, Laurus - AgCert's main creditor - in May 2009. In return, XL TechGroup received US$9.9 million cash from one of AgCert's creditors.

"With reference to AgCert, we understand that the Irish examiner is submitting his proposals to the High Court in Dublin shortly and we would expect to comment further after the full examinership process is completed" - John Scott, chief executive officer at XL TechGroup said.

For more information on AgCert - Click Here