Small Talk: Biofuel investors lose out as board plays blame game

Click to follow
The Independent Online

The demise of Biofuels Corporation might have been widely predicted but it highlights the fact that even if an industry has the potential to start laying golden eggs, you've still got to find a capable midwife.

Shares in Biofuels, the UK's largest biodiesel producer, touched 300p about two years ago. But the company is set to de-list from AIM after Barclays forced it to accept a debt-for-equity swap that will, in effect, leave remaining shareholders with just 6 per cent of the company.

Biofuels seems reluctant to accept much blame, instead pointing the finger at the oil industry for failing to implement the Renewable Transport Fuel Obligation and subsidised American biofuel imports, even though the bulk of global biodiesel production comes from Europe. The truth is that management should accept most of the responsibility for the state the company is left in. Biofuels has ploughedthrough more than £100m of debt and still requires "substantial" investment to reach profitability. True, it has been unlucky, plagued by technical difficulties at its Teeside production facility. But institutional investors, some of whom backed an equity fundraising issue at 230p, have largely abandoned ship.

Amazingly, it looks like the only boardroom departure based on the most recent turn of events is Clare Spottiswood, former chief of gas regulator Ofgas. The rest of the board will live to fight another day, providing shareholders back the debt restructuring at the EGM, scheduled for 23 July. Sadly, they have little choice.

The biggest sigh of relief will probably come from D1 Oils. It backed out of a merger with Biofuels in December 2005, and last week pulled off a major coup by signing a development deal with BP, a breakthrough for a company worth just £150m.

Perhaps it is also fitting that the end of the road for Biofuels as a public company should coincide with the end of Tony Blair's tenure in Downing Street - it was a year ago last week that he officially opened the ill-fated Teeside plant.

Akers Biosciences

Small wonder that Akers Biosciences' results passed last week without attracting much attention. It's the usual story of biotechs: plenty of potential but little in the way of sales and profits; and its shares languish at near an all-time low. But recent developments mean its shares deserve another look.

The Philadelphia-based company, one of the first American stocks to list on AIM, has undergone a shake-up of its finances and operations. It has patents, or is awaiting patents, on 60 products, but it will concentrate on four key screening products - for blood alcohol levels, Heparin allergy, battlefield blood transfusions and cholesterol. The US military has completed two orders for the breathalyser, while Cardinal Health, a supplier of America's hospitals, has agreed an exclusive distribution deal for the Heparin allergy test.

Heparin is a generic drug used to prevent blood clots during operations, and allergy to the drug is one of the main causes of operating deaths. Testing for the allergy takes 24 hours and is expensive; Akers' kit provides a result in two minutes and costs just $50. The company has FDA approval for all four products.

Perhaps the most interesting developments is the appointment of Thomas Nicolette as company president. A veteran of the security industry and with a history of growing companies, Mr Nicolette is an impressive addition to management and has the commercial nous that Akers had been sorely missing.

This is not one for anyone not prepared for a bumpy ride. But after six years of stumbling, Akers could be set to finally pick up the ball and run with it.

CMR

With the market's enthusiasm for alternative fuel stocks drying like yesterday's washing up, perhaps is isn't surprising that shares of CMR Fuel Cells are short on buyers. That could be set to change this morning as the company prepares to announce a joint venture with Samsung that could transform CMR's prospects.

The world's largest maker of consumer electronics has given CMR's technology a big boost by agreeing to collaborate in the development of a fuel cell using CMR's reactant stack technology. Although fuel cells have been a jam tomorrow story, this deal could mean the technology is adopted across a range of Samsung's products, including mobile phones, MP3 players and laptops.

The consumer electronics market has been the first to adapt to, and adopt, new technology, and battery life is a perennial problem for manufacturers and consumers alike.

Financial details of the contract have not been revealed, but chances are the Samsung deal will reverse CMR's recent slide.

Comments