The Company is aware of some false and misleading rumours circulating in certain public forums, and wishes to provide clarification in relation to those rumours to guard against a false market in its securities.
In addition, the Company takes this opportunity to also update the market about the current status, strategic direction, and near term plans associated with our business’ commercialisation activities.
ECT is in possession of documents that falsely accuse the Company of certain behaviour, and the circulation of this false information may be adversely affecting shareholder value. These documents make a number of allegations, including:
- On or about June 2013, ECT had a legitimate and sensible proposal to merge with another company;
- That proposal could or should have been referred to ECT’s shareholders for approval, and such a referral was required in order for shareholders to decide on the veracity of the offer;
- The directors of ECT “denied” ECT’s shareholders these rights, in breach of ASX rules;
- Instead, the directors “dismissed summarily” this proposal and [most egregiously] that they did so “based on director self-interest”; and that
- Some months prior to the trading halt which commenced on 31 December 2013 pending ECT’s receipt of notice from the Victorian and Commonwealth governments concerning its application for a grant under the Advanced Lignite Demonstration Program (ALDP), the directors had information of a very credible and accurate nature regarding ECT and ALDP status which had not been disclosed to the market.
In an earlier update on the Company’s website, it was stated that the Company would explore its options with respect to the rumours that were false and misleading.
To be more specific, some of the rumours in circulation are complete fiction. Some have elements of fact in conjunction with various distorted assertions, with the apparent intent to mislead or influence. Some of the elements of fact can only be obtained via the breaching of confidentiality obligations.
Insofar as it is the Company’s obligation to comply with both ASX and ASIC rules and regulations, instances of these confidentiality breaches and attempts to influence have been referred to the appropriate authorities for consideration of possible breaches of the Corporations Act and action should that be deemed appropriate. It is the Company’s intention to ensure that, through this clarification, we remove or reduce the risk of rumours inappropriately influencing the market in the interests of compliance, as well as with the view to protect shareholder value in the event a false market is created.
The following actions have been taken:
- The Australian Securities and Investment Commission (ASIC) have been provided copies of documentation for consideration.
- The Company’s solicitors have written to a stock market discussion site regarding potential breaches of the Corporations Act;
- The company involved in preliminary discussions has been notified (see section on merger discussions below); and
- The Victorian State Government has been notified of the allegation regarding prior knowledge of ALDP outcomes.
The Directors of ECT take this opportunity to set out the facts relating to events, allowing the market to be properly and accurately informed of current status, strategic direction and immediate plans for the commercial delivery of Coldry and Matmor.
On 3 Jan 2014, ECT announced the result of its application to the ALDP, i.e. that ECT’s application for an ALDP grant had not been successful. As stated in the opening bullet point of this ASX announcement (link), the Company had at that time just been advised of the outcome. Specifically and for avoidance of doubt, we outline the following timing of events:
- Monday 30 December 2013 (pm): phone call received from the ALDP supervising manager at the Department of State Development, Business and Innovation (DSDBI) advising that outcomes had been reached, and that official written notification could be expected later in the week. A meeting was arranged with the Department for the morning of Thursday 2 Jan 2014 (the earliest time the Department indicated was available) to discuss the outcome in the context of the company’s disclosure obligations.
- Tuesday 31 December 2013: The Company requested, and was granted, a trading halt pending the meeting and receipt of written notice.
- Wednesday 1 Jan 2014: Public Holiday
- Thursday 2 Jan 2014: Meeting with ALDP manager and Department Director. Receipt of written notice. Preparation of ASX announcement.
- Friday 3 January 2014: Release of ASX announcement and lifting of Trading Halt
Before 30 December 2013, in view of speculative media articles and rumours in the second half of 2013, and consistent with prior ASX announcements, ECT contacted the Department on several occasions, and the ALDP supervising manager maintained to ECT on each occasion that no decisions had been made and no applicants had been advised of outcomes. ECT has informed the department of these rumours and is seeking written advice from them reinforcing their previous statements.
Claims that the Directors of ECT were aware of the outcome of ECT’s application for an ALDP grant as early as June 2013 are erroneous and inconsistent with the confirmations which ECT had received from the Department during the course of the review process.
It is a normal function of business to receive, review, assess and prioritise various opportunities, including rearrangement of asset and capital structures.
In ECT’s case, in mid-2013, it led the company to enter into a preliminary MOU under which, prior to any material merger discussions, the fundamental valuation processes were to be reviewed. It became apparent very early that a common approach to placing values on various assets was not possible. As a result, the board unanimously agreed that further discussions should conclude with no further action.
At no time has a firm merger proposal been received by the Board from any company, and at no time has a transaction been under negotiation, which was withheld from shareholder consideration.
However, the Company will continue to be open to any reasonable approaches in this area.
Options issue & Capital Raising
As previously announced, the Company intends to proceed with an issue of new Options, consistent with the resolution passed at our most recent AGM, though with a review of the pricing structure to ensure it better represents the current market conditions.
The review process for the new pricing structure is not yet concluded. When this review has been completed, the new Options issue will be subject to approval by shareholders at a General Meeting, which will need to be held prior to the issue of the Prospectus required. The Notice of Meeting, when issued, will contain all the required information.
On other activities related to capital raising and capital structure, the company reminds shareholders that it continues to engage with Monash Capital Group regarding their planned investment in ECT.
The delays to Monash’s funding are beyond the control of ECT. The Company remains in regular contact with Monash’s principals and is satisfied that their efforts to fulfil their obligations and objectives are genuine.
The capital requirements for ECT to complete full demonstration of our technologies is significant and the Board continues to assess a variety of options that will allow the commercialisation of Coldry and Matmor. In the event that any substantive capital deal is negotiated, the market will be appropriately informed and as required, shareholder consent will be sought.
The Company’s India strategy supports our fundamental direction. That is:
- Successful demonstration of ECT’s Coldry technology is currently the key objective of the Company and is the gateway to commercial deployment and revenue generation.
- Revenue is the key to delivering fundamental shareholder value.
Our strategy in India provides a faster and cheaper path for developing both Coldry and Matmor, compared to initiating the same in the Australian market.
The initial opportunity in India is two-fold:
- Demonstrate and deploy Coldry on lignite assets
- Fabricate Coldry plant for deployment in India
This then opens opportunities for fabrication of Coldry plant components for deployment globally and development of Matmor in India.
Demonstrating for least-cost in India, followed by deployment of the validated-at-scale process in Victoria as either rail and port infrastructure is developed to support exports, or other local markets or integration opportunities develop is a sound approach.
Demonstration in India, with its projected cost savings and speed to market, has the potential to deliver significantly better outcomes than a government supported project here in Victoria driven by a lower requirement to raise funding, despite the (now missed) opportunity for Government support funding.
The expected lower capital costs in India are now the subject of important project activity with YES BANK. YES BANK is one of India’s largest private commercial and institutional banking firms, and has been engaged to support delivery of our India strategy. Current activity includes development of our Coldry plant and equipment fabrication partnerships, as well as key activity to develop further deployment options i.e. Commercial Demonstration opportunities.
ECT and YES BANK have carried out a manufacturing capability study, narrowing the initial list of 20 fabricators to 8 during December 2013 following detailed assessments. All are capable of fabricating Coldry plant components to the required specifications within our Coldry plant design. The company has since provided partial design specifications to the shortlist and await their responses in coming weeks before moving to the final stages.
On the Commercial Demonstration aspect of our India strategy, we continue to focus on Neyveli Lignite Corporation (NLC). NLC is a semi-state-owned Lignite Company that controls 70% of India’s lignite and runs their largest Lignite power stations.
ECT does not yet have a binding commitment with NLC, but is working co-operatively with NLC, with the next steps being provision of the outcomes of the Manufacturing capability project, inclusive of localised capital cost estimates and Engineer-Procure-Construct partnerships capable of delivering the project.
While NLC are the company’s major focus in India, they are not the only opportunity to demonstrate Coldry technology. Significant lignite reserves exist in the states of Gujarat and Rajasthan, which contain portions of the larger Thar Desert lignite field, which extends into Pakistan. Importantly, while these states are rich in lignite, they also have significant issues associated with thermal power generation – namely access to water. These features make Coldry an attractive option in these regions.
For further information contact: Ashley Moore – Managing Director – email@example.com