UNLISTED WA environmental technology operation Occtech Engineering has reached an agreement to merge with the recently listed, but troubled, public company QED Corporation Limited.Under the agreement, to be put before shareholders of both companies, QED has agreed to take over 100 per cent of Occtech, with payment to come through the issue of 60 million fully paid shares, giving Occtech shareholders a 40 per cent stake in the merged entity.Occtech can increase its stake by an additional 37 million shares if it meets revenue targets of $10 million in the current year and $20 million in 2002-03.The deal, brokered by Argonaut Capital chairman Charles Fear, will result in QED changing its name to QED Occtech Limited.Occtech founder Peter Macintosh, Occtech managing director Ivan Bristow and director Tony Fane, who is a professor at Sydney University specialising in membrane technology, will be joining the board.Douglas Miller will continue as executive chairman, while Vivian Thomas and Ian Middlemas will remain as non-executive directors.Mr Miller told WA Business News he was going to play a more hands-on role in trying to improve the performance of the company, which he described as “poor over the past 12 months”.Former Water Corporation senior executive Philip Hands stepped down as managing director just two weeks ago as part of the QED shakedown.“In the past year I have seen 12 people do less than what we had done previously with two. And I tell you I was not happy about that,” Mr Miller said. “I left a lot of the development to others and that was a mistake.”In May, WA Business News reported that Occtech had raised $1.2 million in venture capital for a 25 per cent stake in the company.If the hurdle rates are met over the next two years the deal values Occtech at close to $7.75 million, with the original cache valued at under $5 million based on the current QED share price.In late June Occtech entered into a collaboration agreement with Australian Development Capital Fund, a subsidiary of Chatsworth Stirling Management Ltd.Under the agreement, ADV is to undertake a series of desktop studies to identify gold resources likely to benefit from Occtech’s recovery technology. The patented Cyanofree technology provides opportunities for cost-effective recovery of cyanide and copper from gold carbon-in-pulp and carbon-in-leach plants.QED listed only a year ago after seeking $7.5 million through the issue of 37.5 million 20-cent shares. The company had spent more than eight years developing waste water and biomass treatment technology.In the first half of 2002 QED achieved sales of around $1 million. Staff costs of more than $900,000 and an additional $320,000 on research and development helped chew through the cash flow, leaving the company with a negative net operating cash flow of $1.3 million. However, the quarterly report released last week indicates that the company still has more than $4 million cash in hand.But investors have been unkind to the company. A report into new floats by KPMG show QED Corporation was the sixth worst performing new float offering in 2001-02.Its shares fell 56.5 per cent to close at around 7.5 cents a share by the end of the financial year.Shortly after listing, QED rose to a high of 36 cents a share. This week it was resting on eight cents after a year of steady declines and unfilled product orders, giving the company a market capitalisation of $5.2 million.Last month, QED finalised a $660,000 grant with the Florida State Government Department of Agriculture to install a treatment system for a dairy farmer at Lake Okeechobee.
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