LONDON (Alliance News) - Low-carbon energy technology firm Cogenpower PLC on Monday said it has sold its Esseti Energia srl operating subsidiary back to its previous owner, having only bought the business in December.
Esseti Energia owns and operates a small-size biomass power plant in Predosa, east of Turin in Italy. The company produces renewable electricity from the plant, which is sold to Italy's national grid operator.
Cogenpower said towards the end of the process of taking operational control of Esseti, certain facts not disclosed as part of the acquisition process came to Cogenpower's attention. Due to this, the underlying profitability and performance of Esseti post-acquisition was lower than anticipated.
This has hit Cogenpower's assumptions around the opportunities to develop Esseti and the financial returns the business it anticipated to make.
As a result, Cogenpower said it has decided to sell the business back to its previous owner, Giansandro Cavanna and for Cogenpower to be reimbursed the consideration paid for Esseti and the money it has invested since the acquisition.
Cavanna will pay EUR30,000 in cash immediately and repay a EUR104,655 loan made by Cogenpower to Esseti. In addition, the outstanding EUR2.25 million in bank debt, assumed by Cogenpower as part of the acquisition, will be transferred back to Cavanna.
"The group has taken early action on an asset, which it became clear was unlikely to achieve the financial returns anticipated and also proved unsuitable for our Anaconda technology. Returning Esseti for the cash paid reduces significantly our debt obligation," said Francesco Vallone, Cogenpower's chief executive.
Cogenpower shares were untraded on Monday at 19.10 pence.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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