Former WorleyParsons metals and minerals division head David Richardson will become managing director of Welshpool-based sustainable water and power company Solco Ltd in the company's latest refinancing plan.
Former WorleyParsons metals and minerals division head David Richardson will become managing director of Welshpool-based sustainable water and power company Solco Ltd in the company's latest refinancing plan.
Mr Richardson's appointment will last from August 28, 2006 to June 30, 2007, with his renumeration to be reinvested in in the business, to the tune of 3.5 percent of the company's diluted capital base.
Interests of Mr Richardson, who joined the Solco board in February this year, will provide the company with $1.5 million in loan funds, which the company said, in an announcement to the stock exchange, would alleviate its current financial pressures.
Solco also announced its intention to raise $1.5 million by placing 43.5 per cent of its diluted capital, or 62 million shares, with those interests, using the proceeds to repay the loan and for additional working capital. The company is also considering a shareholder rights issue for the first half of 2007.
The company anticipates it will lift its trading suspension, in place since August 7, after shareholder approval is granted and the transactions are completed, around November this year.
It also predicted a loss of $2.3 million for the 2005-06 financial year after a detailed review of operations, and subsequent costs and writeoffs, along with the resignations of both the chief executive, Duncan Stone, and chief financial officers in April.
Duncan Stone's replacement, Dermot Patterson, also resigned earlier this month to take up the chief executive role at Eastland Medical Systems Ltd.
Before joining the Solco board Mr. Richardson established the successful engineering enterprise of Toussaint & Richardson in 1982 which he ran until it was acquired by WorleyParsons Ltd in 2000. He was then employed as a senior executive, heading their metals and minerals division, which grew to a $65 million turnover business under his direction.
The full text of the announcement by Solco is pasted below
On 22nd August 2006 the Company entered into a conditional Heads of Agreement with interests associated with non executive director, Mr. David Richardson to re-capitalise the Solco Group. Under the arrangement:
(i) Mr Richardson's interests will procure for Solco to be provided up to $1.5 million in loan funds (on a secured basis) for immediate working capital requirements to alleviate Solco's current financial pressures.
(ii) The Company will be seeking shareholder approval to raise $1.5 million in equity by placing approximately 62 million shares or 43.5% of the diluted capital of Solco with interests associated with Mr. Richardson with the proceeds being applied to retire the $1.5 million loan in (i) above and otherwise for working capital purposes.
(iii) Mr. Richardson will become the Managing Director of Solco effective from 28th August 2006 until 30 June 2007, with Mr Richardson's remuneration to be reinvested in Solco equity representing a further 3.5% of the diluted capital base of Solco. Mr. Richardson has over thirty years of high level business experience. Most recently, Mr. Richardson was a senior executive with a large publicly listed engineering company.
(iv) A shareholder rights issue by Solco is contemplated in the first half of 2007 to further recapitalise the Company for future growth business ventures. The present intention of Mr Richardson and his interests is to support such a rights issue to maintain their percentage holding in Solco. They have also undertaken to use their influence to seek to procure third party underwriting support for such capital raising.
The Heads of Agreement and associated transactions are conditional upon all requisite regulatory (ASIC and ASX) and shareholder approvals as well as completion of satisfactory due diligence by the Richardson interests on the Solco Group. The proposed timetable for the transactions is as follows:
Signing of formal documents (by 28 August 2006);
Issue of notice of shareholder meeting (by end of September 2006);
Solco shareholders' meeting ( by end of October 2006); and
Completion (by early November 2006).
The independent Directors believe the Company must be lead by a suitably experienced and financially committed businessman to have the best opportunity to complete Solco's business turnaround and then fully capitalise on Solco's position in the emerging decentralised sustainable power and water market. The Directors believe that Mr. Richardson has the proven strategic business, management and technical skills in closely related activities to successfully develop and execute Solco's short and longer term plans to deliver value for all Solco shareholders.
The Company suspended trading in its securities on 7th August 2006 pending an announcement as to the outcome of a financial review and recapitalisation negotiations. It is anticipated that Solco will apply to the ASX to lift its current trading suspension after completion of the transactions in November 2006.