The new board of superconductor products developer Zenergy Power intends to cut costs in order to reduce the cash outflow and give more time to sign up commercial and strategic partners.
Zenergy needs global partners and it has already received interest from potential partners. Territorial and product licences are one way forward but there could be joint ventures and asset swaps. A strategic investor in the holding company is another alternative.
The board argues that an annual cash burn of more than £10 million is far too much for a company of Zenergy's size. The cost base is being reviewed.
Rebel shareholders removed the non-executive directors of Zenergy Power during April after they disagreed with the strategy of selling the company.
Chairman John Poulter and non-executives Keith Hodgkinson, Tony O’Reilly, Christopher Nash and David Jeffcoat have all left the board. They felt that it would not be in the interest of shareholders to enter into a public debate on the strategy, which was originally decided on because the board felt that the company was too small to be viable as an independent business. Karen Chandler recently stepped down as finance director.
The process of selling the company and/or its constituent businesses was still at an early stage. This process has been stopped. Nobody had started due diligence. The rebel shareholders believe that the sale would not have produced a valuation in line with the underlying value of Zenergy.
Simon Cleaver is executive chairman and David Whelan and Georg Oehm joined the board as non-executives. Whelan is chief executive of Cloverleaf, which owns more than 10% of Zenergy. Dr Oehm owns 1.7% of the company. Two more non-executives will be appointed in due course.
Zenergy is expected to lose money in 2011 and 2012 even though revenues should grow strongly. Broker Peel Hunt believes that there could be a cash call even though there was €15.8 million in the bank at the end of 2010. The existing cash may not last much longer than one year if the cost base is not as soon as possible.
Market: AIM
Symbol: ZEN
Price: 14.62p
12-month high/low: 87.5p/12p
Market cap: £10.1 million
