Another mystery player added to Avocet mix

 by DOUG COLLIE

Shareholders in two companies - Avocet Natural Capital (ANC) and Gennfros - have been urged to resist a 'hostile' £250 million takeover bid by an unnamed major oil company, and stick instead with a group of anonymous investors said to be waiting in the wings.

The latest twist in the long and winding avocet fuel additive saga was revealed this weekend by Avocet boss and Gennfros life president Martin Frost who told some 600 ANC stakeholders of a £50 million offer for the firm's intellectual property.

According to Mr Frost that could result in a £43 million share-out for investors after he and two fellow travellers in the avocet venture - Dr Bob Jennings and US-based Glyn Short - received the £7 million they are due as creditors of ANC subsidiary Avocet IP Ltd.

Mr Frost explained in a shareholder letter that the approach from the suitor was originally perceived to be a friendly joint venture oil and gas company partnering with Gennfros Limited [ANC's successor] to develop and market the non-explosive methanol additive. Avocet was set up by Mr Frost and Dr Jennngs in 2014 but has yet to bring any product to market.

As well as the bid for Avocet IP, Mr Frost outlined a £200 million takeover offer for Gennfros, which was only incorporated in September 2020, and has yet to have four patent applications approved.

But unfortunately, wrote Mr Frost: "The directors of both Gennfros and ANC Plc along with Gennfros Limited’s new investors are hostile to this approach as it does not meet humanitarian and /or shareholder value prospects.

"It is understood that this major oil company is of the opinion that it would prefer to obtain a quasi-monopoly for the use of Avocet’s and then Gennfros’s intellectual property – it is understood that all ANC Plc and Gennfros Limited shareholders shall be shortly written to".

And shareholders were then informed: "To counter this unwanted offer, the directors of both Gennfros Limited and ANC Plc along with the new investors have commissioned a rebuttal document – in addition to the proposed rebuttal document, calls today were made to leading Gennfros Limited shareholders to ascertain if they would separately contract with the new investor to lock out the proposed hostile offer."

A business expert who studied Saturday's widely circulated correspondence from ANC and Gennfros told Not Just Sheep & Rugby: "In my opinion, a takeover offer, friendly or unfriendly, is extremely unlikely at this time."

The specialist pointed out: "All Gennfros has are four patent applications.  Before a patent is granted it goes through a rigorous examination process to ensure that it is indeed “novel” and that it does not infringe on anyone else’s intellectual property.  Until it is through that process there is no assurance that a patent will be granted."

By way of example, in the UK approximately 22,000 patent applications are filed each year while only some 5,000 are granted – an approval rate of roughly 23% (Source: Intellectual Property Office).

"So Mr Frost would have you believe that a major corporation is prepared to take the significant risk of investing £200 million in something that in the end, has less than a one-in-four chance of success."

And the expert claimed"Equally importantly, while Mr Frost is making much of the fact that his new additive is non-explosive, he has not addressed the fundamental drawback to it.  Methanol has only half the thermal efficiency of diesel.   

"In simple terms, this means that you will only go half as far on a gallon of it compared to diesel.  All the economic data that he has provided to us so far shows that the price is not low enough to provide a per/mile cost advantage versus diesel, an essential element for the new fuel’s success."

However, the observer of the Avocet activities did add: "I am pleased to see that he has reduced his valuation of Avocet’s IP down to £50 million from the outrageous £100 million to £400 million that he was promising a shareholder just a week ago.

"On the downside, it does seem that he has selective amnesia as he is claiming that he, Jennings and Short are owed £7M while forgetting that he owes ANC £6.2M plus 5% interest for shares that he arranged to have issued to himself but he has never paid for.

"Lastly, isn't it time that he stops calling them "new investors"?  They have been around for six months now so they are not "new", and despite many promises, they have never invested, so they are not 'investors'".