Tuesday, 1 November 2016

Will bamboo join NERR on financial scrapheap?

EWAN LAMB reports

A second 'eco-friendly' fund run by the Premier Group Isle of Man stable is facing oblivion only weeks after shareholders in their recycling and renewables investment facility learned there was no chance of recovering millions of pounds in the wake of liquidators being appointed.

Premier Group is the offshore outfit which was supposed to fund Scottish Borders Council's £21 million waste treatment facility on the outskirts of Galashiels until the local authority's deal with 'specialists' New Earth Solutions Group unravelled and was binned in February 2015.

Unfortunately Borders councillors seemed blissfully unaware for more than four years that the New Earth Recycling & Renewables Infrastructure PLC (NERR) was incapable of funding the project. The elected members presided over the loss of at least £2.4 million of taxpayers' money before abandoning the deal and the strategy on which it was based.

Much of the money raked in by NERR's directors from investors was being used to provide loans to the equally incompetent New Earth Solutions Group which could not deliver the technology needed to build the Easter Langlee plant. When the loans could not be repaid to NERR and other lenders NES Group was forced into receivership earlier this year.

Now it has emerged that Premier's Eco Resources Fund which allowed investors to risk large wads of money in bamboo plantations in Nicaragua and South Africa had until yesterday (Monday October 31st) to raise substantial amounts of extra finance otherwise it too could face the prospect of liquidation.

The Halloween deadline must have been particularly scary for investors worldwide who may lose their cash before the bamboo is harvested.

Last year Not Just Sheep & Rugby revealed the $36 million Eco Resources Fund handed over almost $3 million in fees to the fund's directors in their capacity as managers and promoters.

Those payments were made against a gloomy financial background outlined in the Fund's annual accounts. The report revealed there had been a "disappointingly high" level of redemption requests from investors, and the directors had closed the fund to redemptions until the liquidity position improved, possibly by 2017. In the meantime a further $15 million would be required to guarantee success.

There has been a series of circulars to investors in recent months, the most recent issued in October. According to Jamie Sutton, a director of Premier Group, attempts to secure a new lending facility was proving "very difficult" and was nowhere near conclusion.

He wrote: "The risk to the Fund is that this lending facility will not conclude or that it will not conclude in a timescale that is satisfactory for the Fund. The directors are now exploring options to raise new capital from shareholders."

Mr Sutton warned that as a minimum, $500,000 in cash had to be secured by the end of October. A previous missive, sent out on October 5th claimed the Fund was looking to raise up to $30 million in additional investment to repay the lenders who put up the money for the plantation costs and to fund future expenses before the bamboo crops produced a profit.

However, the latest letter from Mr Sutton concludes: "Should loan negotiations not be successful or should new investment not be committed then a board meeting has been set for 1st November 2016. If nothing changes from the current situation, it is therefore likely the directors will seek approval from the Management Shareholder to wind up the Fund and appoint a liquidator".

As previously disclosed in these columns the Management Shareholder in this case, and in the case of the now liquidated NERR Fund is Premier Distribution Inc., registered in the tax haven of British Virgin Islands, based in the offices of law firm Mossack Fonseca, and featured in the 'Panama Papers' files available on the internet.

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