Investors pitch $2.4m for ESI rights

Environmental Solutions International Ltd’s long struggle to make its Enersludge waste treatment technology a commercial success may well be left to Victorian investors, who are set to take control of the intellectual property with a $2.4 million recapitalisation plan.

Melbourne-based Rofin Australia Pty Ltd is leading a group of investors who have put forward a plan to take control of ESI, the company Denis Glennon listed in 1992 and struggled to make a commercial success for more than a decade. It was put into the hands of receivers 12 months ago.

ESI ran into trouble in early 2004 when it revealed losses on two near-completed waste treatment systems it had built and markedly reduced profits on a third project.

Rofin is a scientific instrument marketing company specialising in forensics. It also has links to environmental company ES Link.

The company is now subject to a deed of company arrangement administered by Pitcher Partners’ Bryan Hughes.

On December 5, shareholders of the failed ESI will vote on the Rofin-led proposal to inject $2.4 million into the company, about half of which will be available to pay the trustee’s expenses and provide some return to creditors.

If the restructuring deal is approved, existing shareholders in ESI will emerge with a little more than 3 per cent of the recapitalised company.

Mr Hughes said return for unsecured creditors from the deal would be “very minimal”, though he pointed out that secured creditor Commonwealth Bank would not get 100 cents in the dollar either.

About $830,000 will be spent over two years to review and develop the Enersludge technology, including a German pilot plant, as well as review new projects.

The technology was developed in Germany in the 1980s before being sold to the Canadian government and then to ESI in 1989.

A plant was built at the WA Water Corporation’s sewerage works at Shenton Park, though it only uses part of the Enersludge process due to the economics of the treatment.

According to documents released to the ASX, Rofin has identified technology that may help commercialise Enersludge’s waste treatment process. Rofin, which is run by Dr Hadrian Fraval, has no obvious link to the business of ESI.

However, Rofin director Justin Liberman is a director of ES Link, a Victorian conservation group which took control of delisted conservation property owner Earth Sanctuaries Ltd in a rescue deal earlier this year. He has taken a seat on the board of Earth Sanctuaries.

ES Link’s businesses include solar and wind-energy generation, project management and consulting work for environmental projects and the Lake St Clair Wilderness Park ecotourism venture in Tasmania.

Mr Liberman was also a director of RSVP.com. A private company of Mr Liberman’s realised $13.3 million in July when it was bought by Fairfax Ltd.

A number of different people are linked to the Rofin deal, including Graham Bell, who will take almost 10 per cent of ESI under the plan. Mr Bell was managing director of Bell Bros Holdings Ltd, a listed diversified group in the early 1970s which had grown out of the Pilbara-based Bell family’s mining transport services company. These days, Mr Bell has his own investment company.