15 Sep 2011 10:31
15th September 2011
Zenergy Power plc
("Zenergy" or "the Group")
Corporate Restructuring
Business Focused of New Design FCL
·; Business restructured to focus entirely on the development and marketing
of the FCL ("Fault Current Limiter") product.
·; Development of next generation FCL design that is not dependent on HTS magnets and thus capable of significantly reducing complexity and manufacturing costs.
·; No further capital to be deployed on the development of Second Generation (2G) high temperature superconductor (HTS) wire or the magnetic billet heater (MBH).
·; No further capital to be deployed in the Group's German subsidiary, Zenergy Power GmbH, which is expected to enter into administration in the next few days.
·; Headcount to be reduced by 70% with FCL operations and teams in the USA and Australia remaining in place.
·; Run rate operating cash burn to be reduced by two thirds from approximately £12 million to £4 million per annum.
·; Current Group cash balances are approximately £6 million.
The Board of directors of Zenergy announces that it has completed a thorough strategic review of the Group and each of its operating divisions and product segments and has decided to focus its resources on the development and marketing of non-superconducting FCLs.
Extensive discussions during recent months with many large and established industrial technology companies suggested that the product with the most near term commercial viability - and hence potential for external investment and collaboration - is the FCL.
While significant progress has been made with the development of Zenergy's 2G HTS wire and magnetic billet heaters, such progress generated insufficient external interest to result in a meaningful investment, licensing or strategic collaboration with the Group. The Board concluded, therefore, that the large amount of further investment and time required to achieve full commercialisation of the Group's intellectual property in these product areas is unrealistic. Consequently, no further capital will be deployed on these projects for the foreseeable future.
Future activity will be focused on the next generation FCL, an advanced design of its magnetic fault current limiter technology that is not dependent on HTS magnets and thus capable of significantly reducing complexity, maintenance and manufacturing costs. Using lower cost copper based magnets; the new FCL is expected to accelerate commercial adoption. Further testing is underway throughout the fourth quarter of this year at which time results will be announced along with further updates on the future strategy of the Group.
As a result of the material adverse change in the commercial prospects of both the 2G Wire and MBH product lines, the Board has decided to immediately cease funding of the Group's German subsidiary, Zenergy Power GmbH, which is expected to enter into administration in the next few days.
The immediate impact of this decision on Group-wide operating costs will be to reduce headcount related costs by approximately 70 per cent. The FCL design and testing unit in San Francisco, USA and research operation in Wollongong, Australia will remain in place. The Group's operating cash burn will reduce by two thirds to approximately £4 million per annum. Group cash balances currently stand at approximately £6 million.
Commenting, Executive Chairman, Simon Cleaver, said:
"For years Zenergy has lacked focus and has tried to develop many related, but ultimately too diverse products and was at risk of becoming a superconductivity 'university'.
"From a business and shareholder perspective we have made the decision to focus on the area where we could see the highest prospect of shareholders value creation in the foreseeable future. Subject to a successful outcome from the testing already underway in Australia of a large scale prototype, we see significant potential for rapid and profitable growth from the next generation FCLs in a demonstrably large market that exists today.
"We expect to report back with the results of the new FCL prototype tests before the year end and whilst we have every confidence in our FCL team and the technology, the Board intends to conduct regular and on-going FCL progress reviews to assist in shaping the longer term future of the Group."
-Ends-
For further information please contact:
Simon Cleaver Zenergy Power plc +44 1344 667 347
Adam Pollock/Katherine Roe Panmure Gordon +44 207 459 3600
David Bick/Mark Longson Square1 Consulting +44 207 929 5599