Chinese 'partners' told of Avocet's multi-million pound losses

by DOUGLAS SHEPHERD

A catalogue of loss making events which apparently cost the Avocet Group of 'disruptive technology' companies and their shareholders many millions of pounds was included in a company document aimed at attracting potential Chinese investment into the business.

The 26-page presentation from Avocet Natural Capital's board and directed at a Professor Ji (Karena) Yang was also circulated to the Group's 650 investors two days before Christmas 2019. It is headed "Avocet’s natural capital technology and concepts shall transform the world”.

This pitch for Chinese partners to help develop Avocet's 'revolutionary' products in the fields of agriculture and green fuel was made shortly after the Group's annual meeting when chairman Martin Frost announced they would be 'parking' flagship company Omega Infinite, previously known as Avocet Infinite.

In an accompanying letter to existing shareholders Mr Frost wrote: "When I and colleagues were putting this Chinese note together, we were amazed by just how much we have all achieved upon this Avocet journey and just how little money this success is built upon.

"Again, there is a touch of sadness that Avocet needs to go to the Chinese because we are unable to further finance Avocet. However, if you can support Avocet a little further with investment it will give Avocet greater countervailing power in our present Chinese negotiations."

Avocet's presentation to Professor Yang explains that the planned 2018 acquisition of a state-of-the-art chemical plant at Seal Sands [Tees-side] to manufacture the ‘avocet cetane additive’ had been aborted due to ‘health & safety reasons with a direct £700,000 expenditure loss plus much executive time.'

And according to Mr Frost and his fellow directors:"The 2018 failed IM fund raise alongside the 2019 Johne's disease debacle lost potential new investment of some £15 million plus into Avocet."

The all-embracing document also says identifiable direct losses in 2019 occasioned by a family dispute exceeded £1.7 million, adding "though overall in share price terms the dispute has probably lost the corporate body of shareholders over £250 million.

Professor Yang is then told that financial support for the creation of Avocet Bio Solutions Plc, an Irish-based subsidiary and described in the presentation as an independent master franchise proved burdensome with a failed Italian farm purchase occasioned by the death of the vendors coupled with the collapse of the Irish cattle market "alongside general EU / Brexit buggeration – an Omega cash drain exceeding £2 million of which over £1 million will be a loss in Avocet Bio Solutions Plc books."

And the company's management claim: "The central fact is that in 2018 Avocet determined that it needed to raise some £8 million to proceed in 2019. For whatever reason the fund raise with [London-based investment specialists] Asset Match not only failed but cost Avocet some £850,000 in legal and other costs for the failed fund raise."

The document suggests that "Legal advice recommends that Omega Infinite Plc first enters into a year long Company Voluntary Arrangement to settle out all problems and creditors, to be followed by a tax efficient Members Voluntary Liquidation which on current predictions will provide a shareholder with a tax efficient sum of some £2 per share in 2021."

In fact a petition to wind up Omega Infinite had already been submitted to the High Court on November 20^th 2019, a month before the “Chinese” document was circulated. The petition was lodged by law firm FieldFisher, claiming to be a creditor of Omega Infinite. Liquidators were subsequently appointed on April 28^th 2020.

And Mr Frost told the annual meeting in October 2019 the company's name had been changed from Avocet Infinite to protect the business from a threatened injunction which would have frozen £800,000 of Frost family money that had been earmarked for creditors of the firm.

He explained to shareholders Omega had once been the "master" company in the Group but it had been damaged by internal splits, and due to mishaps it had lost its credit rating. Avocet Natural Capital would become the dominant Avocet company and Omega Infinite would be 'parked', he said.