A long list of financial issues, overdue accounts, a plant fire and breaches of company law have been revealed in a rare statement to shareholders and investors from the offshore finance house which controls New Earth Solutions [NES] and the fund which was to have delivered a £21 million waste management facility for the Scottish Borders.
The latest update from Michael Richardson, a director of Premier Group (Isle of Man) which has a large stake in the NES group and runs the New Earth Recycling & Renewables (Infrastructure) Fund or NERR seems to suggest an uncertain future for the firm selected by Scottish Borders Council as its contractor for waste treatment services.
And there is an equal air of uncertainty hanging over the NERR fund whose last financial statements were for the year ended March 2014. It means the fund is in breach of the Isle of Man Companies Act. The failure to hold an annual general meeting in 2015 also constitutes a contravention of Manx law although there is no indication that the IOM regulator plans to take any action against Premier Group. The fund has been suspended since late 2013.
Borders councillors certainly made a huge and very costly mistake when they awarded a 24-year deal with a reported gross payment value of £180 million to NES in 2011. The contract was abandoned in February last year with at least £2.4 million squandered for no return.
It would also appear neither elected members nor senior officials bothered to check out NERR to see if it had the resources to fund the proposed treatment plant at Easter Langlee. They left the financial details entirely to NES, a Group with a large level of debt and a brand of technology which turned out to be useless.
Mr.Richardson disclosed last October that the energy recovery facility [ERF] which NES developed at Avonmouth, near Bristol, was proving to be such a financial drain on the businesses that it had been offloaded to an Australian bank for no financial consideration. The same system was to have been installed at Galashiels.
The new missive issued from the Isle of Man says negotiations have been continuing on the restructuring of the waste business of the NES Group. These include talks with a potential 'developer' of large combined heat and power plants in Europe who might take the solid substances produced at NES conventional treatment centres.
"The New Earth management in consultation with their advisers prepared a five year business plan for the senior lenders in the autumn of 2015", writes Mr Richardson. "However, this was rejected by the senior lenders. A revised business plan was developed with capital expenditure kept to a minimum.
"A consequence of this is that some capital improvements to plant have been deferred and this has impacted on the business operations. In addition, the senior lenders have been exploring options for restructuring and exit routes."
The letter goes on to reveal that in December there was a fire at the NES Avonmouth waste treatment plant which was contained. However, processing has been affected since that time. The supply of refuse derived fuel to the Avonmouth BioPower plant was interrupted and discussions are taking place over alleged consequences of the disruption to their business.
"The filing of the accounts of the New Earth companies (they include New Earth Solutions [Scottish Borders] Ltd) has been deferred on two occasions whilst restructuring and exit routes were being progressed by the senior lenders", investors are told.
According to Mr. Richardson, the directors of Premier Group [and presumably those of its associated businesses] appreciate that the lack of clarity is of concern to shareholders. But they firmly believe this course of action offers the most favourable outcome for shareholders.
Investors are promised written details of the ramifications and final outcomes as soon as negotiations on "the assumption of control of the fund and the New Earth companies by the developer and the exit of senior lenders have completed satisfactorily".
There will be a further delay before financial statements are published, and Mr. Richardson warns: "Unfortunately at this time the directors cannot be definitive on the timeline or on further detail as full terms remain confidential".
NES and NERR certainly do not have their troubles to seek!
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