29th Jun 2006 13:30
Greenhouse Fund Limited (The)29 June 2006 For immediate release 29 June 2006 The Greenhouse Fund Limited ("Greenhouse" or "the Company") Licence Acquisitions THE GREENHOUSE FUND ACQUISITION OF BAUXSOL SUB-LICENSES AND OTHER TECHNOLOGIES FROM VIROTEC INTERNATIONAL Greenhouse today announces the acquisition of five Bauxsol technologysub-licences and the purchase of the assets of Sterling Environmental Solutions(together the "Transaction") from Virotec International Ltd ("Virotec"). It isintended that Brian Sheeran, Virotec Executive Chairman, be appointed to theboard of Greenhouse to oversee commercialisation of these technologies. The aggregate consideration for the above transactions is £5 million, to besatisfied by the issue of 30,000,000 new shares in Greenhouse ("Shares") and afurther £500,000 in cash. At the opening price on 29 June 2006 of 15p, the Shareelement is valued at £4,500,000. As a result of the issue of the Shares, Virotecwill have a 19 per cent. holding in the voting share capital of Greenhouse. Anapplication has today been made for the Shares to be admitted to trading on AIMand it is expected that the Shares will be admitted to trading on 5 July 2006. Background to the Transaction The five technologies being sub-licenced to Greenhouse are Bauxsol platformtechnologies developed by Virotec. These are: (a) ViroConcrete Technology, speciality cement products with applications inshotcreteing, grouting, high density concrete, acid exposed concrete orconcretes that are exposed to water or wet environments, particularly salt waterenvironments; (b) ViroAirFilter Technology, designed to remove mercury, CO2 and otherpolluting metals from industrial flue gasses by 'gas scrubbing' suchenvironmentally hazardous compounds from waste gases prior to their release intothe atmosphere; (c) ViroFertiliser Technology, aims to control the level of phosphate pollutionand increase crop yields via the slow release of phosphate from superphosphatefertilisers; (d) Gastric animal applications; aims to relieve chronic and potentially lifethreatening gastric problems within animals; and (e) Any further new commercial applications developed from the Bauxsoltechnology; giving Greenhouse access to the time and efforts of the two mainscientists, their facilities and staff involved in the development of Bauxsoland its applications in the Southern Cross University in New South Wales,Australia. The intellectual property rights of the above technologies are either helddirectly by the Virotec Group or licensed to it by Nauveau TechnologyInvestments Limited, a company outside the Virotec Group and is ultimately ownedby either Nauveau Technology Investments Ltd or another entity, Mount AspiringGeochemistry Limited, a company outside the Virotec Group. Greenhouse has established a wholly-owned subsidiary company, Greenhouse IPDevelopment Limited, to hold the sub-licences and to develop the relatedtechnologies. The strategy is to further develop the technologies, using both academic andcommercial partners from within industry. Once an application has been fullycommercialised, Greenhouse will consider the strategic options available tomaximise shareholder value. Such alternatives include introducing a newstructure for each license, depending on the particular market and opportunitythat it faces. In addition, as part of the Transaction, Greenhouse has, through another whollyowned subsidiary (Greenhouse Organic Solutions Limited), purchased the assets ofSterling Environmental Solutions Ltd ("Sterling"), a UK non-trading company witha view to establishing a regional treatment centre ("RTC") for the treatment ofhigh strength organic waste streams. The assets acquired include allintellectual property rights owned or used by Sterling, including all rightsrelating to the concept for the treatment of industrial waste at a centraltreatment centre or RTC. Sterling has no trading revenue and has not filed anyaudited accounts. In addition, it is intended that Greenhouse will enter into a 12 month option toacquire the business and assets of ImperativePlus Pty Ltd, a wholly ownedsubsidiary of Virotec. It has been agreed in principle that Greenhouse will paya nominal consideration on grant and on exercise of this option. Greenhouse Chairman Nigel Wray commented, "This is a very exciting transactionfor Greenhouse, coming less than six months since its launch on AIM. We believethat Bauxsol is a tremendous technology and provides a platform for a range ofapplications; each of the applications we have licenced has the potential tobecome a significant business in its own right. Greenhouse will also work withVirotec and our research team to create further new Bauxsol applications. I lookforward to announcing developments as Greenhouse works on the applications andpartners with academic and industry research bodies to further the commercialdevelopment of these technologies." For further information please contact: Paul Gazzard,Greenhouse Advisor Ltd.Tel: 020 7355 7600Email: [email protected] Charles Ryland/Ben WilleyBuchanan CommunicationsTel: 020 7466 5000 Further details of the Transaction Virotec's patented platform Bauxsol Technology has been designed to extractheavy metals, arsenic, phosphates and cyanide from water, soil and air throughits bespoke re-agents, without creating any hazardous waste streams. Oncetreated, wastes are rendered inert or non-hazardous, and significantly easierand cheaper to either be disposed of or reused. Bauxsol re-agents neutraliseacidity, bind and immobilise base metals and other elements via various chemicalreactions upon coming into contact with them. Whilst Greenhouse will not acquirea licence to use the core Bauxsol Technology, it will be granted fivesub-licences to develop other areas of application and Virotec has agreed tosupply Greenhouse with Bauxsol materials. Due to Virotec's commercial concentration on the roll out of other applicationsof the Bauxsol Technology, Greenhouse has been able to enter into the fivesub-licenses. Virotec's consideration for the deal is primarily in Greenhouseequity, giving Virotec a direct interest in supporting Greenhouse in thelong-term in its development of the various applications. Virotec has agreed not to sell or otherwise dispose of the Shares issued to itas consideration for the Transaction for a period expiring on the firstanniversary of Greenhouse's accounts being published, which is expected to beMarch 2008, without the consent of Greenhouse and Evolution Securities Limitedsave in certain limited circumstances. The sub-licences also provide that Greenhouse will pay Virotec an ongoingroyalty on any revenue earned from the technologies. In addition, if any of thetechnologies are subsequently sold by Greenhouse, any sale will include theobligation to continue to pay royalties to Virotec and for Virotec to retain a19 per cent. interest in the technologies for zero consideration. Detailed below are the five specific applications being: Sub-Licence 1: ViroConcrete Technology This Bauxsol application has a potential commercial market in the specialityconcretes area. Following initial research by CSIRO (Commonwealth Scientific andResearch organisation, Australia) and Virotec that enabled a patent applicationto be filed, research has continued at Queens University, Belfast underProfessor Bashir. This is a leading department for cement and aggregatesresearch in Europe and has won awards and achieved pier recognition for thiswork. Potential applications for ViroConcrete products include shotcreteing, grouting,high density concrete, acid exposed concrete or concretes that are exposed towater or wet environments, particularly salt water environments. Greenhouse will continue to develop this technology with a view to fullcommercial realisation. Following further proposed research and collaborationwith Queens University, Greenhouse will increase commercial and sales support asthe concrete market gains awareness of the products and their potential. Thelong term aim is for ViroConcrete products to be recognised as the defaultproduct for particular concrete applications and therefore become an industrystandard. Sub-licence 2: ViroAirFilter Technology This Bauxsol application, which has progressed in collaboration with the USEnvironmental Protection Agency, has been primarily focussed on the removal ofmercury and Co2 from industrial flu gases. With these 'gas scrubbing'applications ViroAirFilter Technology can remove environmentally hazardouspollutants from waste gases prior to their release into the atmosphere. The results to date indicate that there is significant removal of both mercuryand Co2 from industrial exhaust gases when they are allowed to pass through abed of a specific ViroAirFilter product. There is potentially a large commercialmarket for these products. The next stage is to undertake a more wide reachingstudy, in conjunction with a specialist academic body. Sub-licence 3: ViroFertiliser Technology This Bauxsol application aids phosphate pollution control and has the potentialto increase crop yields. Currently, large amounts of phosphate fertiliser areapplied to farm-land, with significant proportions washed from the soil by rain,meaning poor utilisation of the fertiliser and contamination of local water. AViroFertiliser re-agent is added to the fertiliser material once mixed with thephosphate fertiliser. It binds with the phosphate, keeping it in situ, thusdecreasing the fertiliser run off, water pollution and provides the user withthe opportunity to achieve greater value from the fertiliser. Tests have shown there was a significant improvement in crop yields when theViroFertiliser Technology was used with fertiliser on, amongst others, cottoncrops in Australia. The next stage in the development is a combined study,carried out by an internationally recognised research organisation to show thecombined effect of the product in its target application. A well known Europeanagricultural college is interested in carrying out this study. The results willbe used to raise the profile of ViroFertiliser within the industry. Greenhousewill then approach chemical companies to bring the product through to the pointof commercialisation and roll out. Sub-licence 4: Animal Gastric Applications This Bauxsol application alleviates gastric ailments within animals. A patentapplication has been filed for the application of the material in these areas.Demonstration and proving work indicating the potential for a product hasalready been carried out on horses. This represents a very interestingapplication of the material for the large commercial market of animal gastricproblems. Greenhouse will select an academic institution to do further tests onother species before introducing the product to commercial end users. Sub-licence 5: Further Bauxsol applications This licence gives Greenhouse the right to continue the development of furtherapplications of the Bauxsol Technology that are not currently subject tocommercialisation activities by Virotec into other target markets. In addition,Greenhouse will have access to the time and efforts of the R&D scientists, theirfacilities and staff involved with the development of Bauxsol and itsapplications in the Southern Cross University in New South Wales, Australia. Sterling The assets of Sterling, which is a dormant non-trading company are beingacquired pursuant to a potential opportunity to develop an existing dormantbiological treatment plant in the North of England (which does not form part ofSterling's assets) with a technology retro-fitted to the site and to operate thesite as a third party treatment centre for high strength organic wastes. TheIPPC permit required from the UK Environment Agency to operate the site has beenagreed to but not issued and this is likely to take approximately 4 months,which is considerably quicker than normal. Greenhouse is in negotiations to acquire the license for the retro-fittedtechnology. The existing IP licensor for the technology is in favour of its useand licensing it for the site. Greenhouse has considerable first hand knowledgeof the RTC market and believes collaboration with a landfill operator partnerwould further enhance the credibility of the project and it is Greenhouse'sintention to seek such a partner following the acquisition of the IP license. Directors' and other Interests Nigel Wray, through PIHL Equity LLP, is deemed to be interested in 7.3 per centof the issued share capital of Virotec and 13.97 per cent of the issued sharecapital of Greenhouse. In accordance with the Articles of Association ofGreenhouse, whilst he endorses the Transaction, he has not voted on the boardresolution to approve the Transaction. It is intended that Brian Sheeran, will join the board of Greenhouse. BrianSheeran, is a director of, and beneficially interested in, 2.9 per cent. of theshare capital of Virotec. Virotec has a 33.64 per cent holding in Hydrodec Groupplc ("Hydrodec") and Brian Sheeran is also on the board of Hydrodec, togetherwith fellow Virotec director, Bruno Bamonte. Rodger Sargent, who is a director and shareholder of Greenhouse Advisor Limited,the Strategic Adviser to Greenhouse's Investment Adviser, is the financedirector of, and also a shareholder in, Hydrodec. Valuation of the Transaction The five Bauxsol technologies being sub-licensed and Sterling are at relativelyearly stages of development and all require investment to bring to fullcommercial realisation. This makes them subjective to value, as they are novelapplications of a relatively new technology. However, given the size of thetarget markets for each of the technologies, the Directors of Greenhouse believethey have significant commercial potential. Given this, Greenhouse has valued each of the Bauxsol sub-licenses at £1,000,000each, to reflect their potential and the requirement for additional cash andmanagement investment. The business and assets of Sterling are not considered tocarry a quantifiable valuation at this stage, so have been valued at a nominal£1. This provides a valuation of £5,000,000. The valuation also takes intoaccount the 19 per cent. equity interest and royalties which Virotec willreceive in any vehicle that any sub-licensed technology is subsequently sold to. Rationale for the Transaction Greenhouse considers this to be a very good opportunity for the Company toacquire licensed technology of potentially significant commercial value. Thislicensed intellectual property should allow Greenhouse to populate its dealpipeline with a platform technology that has the potential to provide manyapplications in the future. The Bauxsol platform technology has already achievedcommercial and regulatory recognition and has already had significantdevelopment capital invested in it by Virotec. Greenhouse will benefit from thisproving work and has the opportunity to further develop the technology into newand as yet commercially untapped areas. Greenhouse considers that the applications; including speciality concreteproducts, fertiliser applications, gas scrubbing and stomach acid treatment inanimals have all had sufficient work done to demonstrate the potential for eachone to become, in time, the platform for a substantive business. The deal structure should ensure that the interests of Greenhouse and Virotecare aligned in working towards the common goal of successfully commercialisingthe intellectual property and business being acquired by Greenhouse. TheSterling platform has the potential to offer an alternative to landfill in thedisposal of high strength organic wastes and be rolled out across the UK andEurope. For Greenhouse, the Transaction has significant potential and brings with itsupport from an established high profile operator in the sustainability sectoras well as the ability to generate its own intellectual property from a platformtechnology in the future. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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