a clean energy finance corporation, page-17

Nice post, Jaded.

Bernard1138, Dyesol won’t be acquired by anyone – the insiders wouldn’t allow it.


Regarding the SpringTree agreement, the interesting question for me is: when will DYE terminate it?

I’ve had a look at all of SpringTree’s Australian deals - so far there’s been 12 (ASX-listed companies, the first was PRR in mid-2009). Of the 12 agreements, 5 (including DYE) have started fairly recently and are still active. But the interesting thing is that the 7 that have finished were all terminated early.

Some examples: PRR signed a 3 year agreement but terminated after 18 months. LCT’s 18 month agreement was terminated after 8 months. CBZ’s 2 year agreement was terminated after 16 months. The list goes on NEU, NCT, BCC – they all terminated early.

So it soon becomes clear that SpringTree is a source of ‘stop-gap’ funding for short periods of time when regular institutional funds are a little harder to come by. The agreed timeframe of the deal is fairly irrelevant because as soon as the company reaches some sort of milestone (usually pre-defined), it dumps ST and returns to its institutional investors, who are more-than-happy to stump up further funds now that progress has been made (ie. the risk is reduced).

It’s important to note that these companies still have capital requirements when they end their ST deal. But they’re able to return their regular institutional funding arrangements (ie CRs). In the case of LCT, a cornerstone investor was found.

With respect to DYE, I’m guessing that institutional investors would only cough up $5.5M in May (as opposed to $12M last year) due to auto and Timo delays, and perhaps the lack of a large financial commitment from Tata. However, as soon as DYE can demonstrate it’s made significant progress, I’d imagine it too will end the ST agreement and return to its ‘sophisticated’ investors. And ST’s selling will cease.

DYE’s near-term goals are:

* establishing a way forward for Timo
* sewing-up the remaining 3 materials deals (eg Umicore)
* choosing a partner for flexibles
* choosing a partner for auto

Certainly it would look like a different company with those things bedded down. But I suspect we’ll need at least one more announcement from Tata before the instos will happily jump back on board. The question is: when will this happen? Next week? Next month? Next year? We shall see.