Problems for gasification and pyrolysis group New Earth have continued after senior lenders rejected a business plan.
New Earth’s proposed £23m gasification and pyrolysis plant near Galashiels in Scotland was cancelled last year and there were financial problems with its Avonmouth energy recovery facility in Bristol (pictured).
Processing at the Avonmouth plant has also been affected since a fire at the treatment plant in December.
Shareholders were sent a letter on 10 May by New Earth Recycling & Renewables (Nerr), the group’s Isle of Man-based investment fund, revealing that senior lenders rejected a five-year business plan prepared by the New Earth management last autumn.
As a result, the management had developed a revised business plan with lower capital expenditure. Some planned improvements to facilities had been deferred and this had impacted on business operations.
Senior lenders were continuing to explore options for restructuring and exit routes, it added.
As a result of the ongoing negotiations, the letter says the company had failed to produce financial statements for the financial year ending 31 March 2015 and was in breach of the Isle of Man Companies Act 1982, the letter says.
It also failed to hold an AGM last year, in contravention of the Isle of Man Companies Act 1931.
Nerr director Michael Richardson said talks were at an “advanced stage” with a developer of large combined heat and power plants in Europe but could not say when they were likely to be concluded.
“The directors do appreciate that the lack of clarity is of concern to shareholders, but they firmly believe that this course of action offers the most favourable outcome for shareholders. It is therefore important that this course of action is progressed in the correct manner,” he said.
“As soon as the negotiations on the assumption of control of the fund and the New Earth companies by the developer and the exit of the senior lenders have completed satisfactorily, the fund will be able to write to shareholders outlining the full ramifications and outcomes in detail.”
The current setback follows a number of recent changes in the group’s top level staff, including David Whitaker’s resignation as a director of all the New Earth companies on 25 November.
Prior to that, Jonathan Fogg resigned as a director of each of the New Earth companies with former Stadler America sales director Gerben Nijland appointed as his replacement and interim chief executive.