It was in April last year that oily Neill Ricketts first announced that Chinese investors were going to buy new shares giving them 15% of Versarien (VRS). The shares roofed it and he dumped vast amounts at 137p - today the shares are 42p. First it was BIGT, the CIGIU and finally YG, a newly established Hong Kong entity set up to source funds working with those other companies that had no websites or offices or phone numbers. Quelle surprise! Guess what?
YG was going to pony up the first third of the dirty moolah by end June but we are told: The last three months have seen significant progress by YG to procure the funding for the first Versarien share subscription. However, the recent and ongoing lockdown restrictions in both China and the UK, coupled with the impact of political events in Hong Kong have understandably had an impact on the process and the ability of YG to complete the first Versarien share subscription by 30 June 2020. The Versarien Board has therefore considered whether it should extend the backstop date, exercise it or not exercise it, and has concluded that it is in the best interests of the Company to exercise the backstop arrangement and return BVT to 100% Versarien ownership for the time being. However, the Company remains in discussions with YG and the Company's decision to acquire YG's interest in BVT does not preclude any future arrangements that may be agreed between the parties. For the avoidance of doubt, the joint venture agreement between Versarien and YG will therefore be terminated upon the completion of the transfer of YG's interest in BVT or 31 July 2020, in any event. Oh dear. So Versarien gets to keep 100% ownership of a Hong Kong operation with zero assets but no wonga. Oh dear. Oh dear.
The problem is that with the share price plunging, Versarien is now receiving less on its death spiral with Lanstead than it needs to cover its bloated costs and thus it was heading for a crash landing in tits up alley by Christmas as I explained just the other day HERE. Luckily for the company, but not for us British taxpayers, the years Ricketts has spent brown-nosing the Tory party have paid off. For he has managed to extract a £5 million loan from the UK Government via Innovate UK. The loan can be drawn down in eight quarterly tranches starting within the next month, repayments will commence 45 months after drawdown and be paid over a subsequent period of 36 months. The Loan attracts at an interest rate of 7.4% per annum with half of the interest deferred until the repayment period commences. We are told that the loan includes normal commercial financial covenants, together with certain operational covenants designed for UK IP protection.
In other words, for almost four years Versarien will be enjoying low interest loans from the taxpayer. That HMG wishes to lend soft money to an enterprise almost up to its limits on commercial debt, reliant on death spiral equity funding as it cannot attract ANY institutional investment and which has a proven track record of lying to investors tells you everything you need to know about the crony capitalism which, as the Jenrick affair shows, is rife at the heart of this rotten Government. Government as a whole has a dire track record of backing losers with such loans and grants. It makes Neil Woodford look like Warren Buffett. Versarien has had six years to commercialise graphene. We learned today that it is delaying what will be abject annual results to August 11 and those numbers will show that it is still making no progress at all in monetising its IP while graphene companies across the world are generating very meaningful sales. So why is the Government spunking YOUR cash on backing a proven loser? I want it on record that I note now, when this Government lead by Jennifer Acuris’ pal Boris finally falls we will look back on some of the “deals” done with party supporters with utter horror and as a template for how crony capitalism works. Folks in the “red wall” seats did not lend our votes for this sort of nonsense.
If, or rather when, Versarien breaches a covenant will the Government pull the plug or force an equity raise like a commercial bank? That would be politically embarrassing would it not. Fellow taxpayer prepare for your cash to go to Money heaven. The morons are overlooking the China fiasco and think that a kiss of death endorsement from Government is a good sign. Whatever. Or maybe it is just a relief that the company will not be going bust at Christmas although by the time we put up our Yuletide trees, the company will be labouring under an ever greater debt mountain and still not generating cash.
Filed under: Versarien, UK Oil & Gas, Eurasia Mining, Forterra, DS Smith, St James House, Innovate UK
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