A $2 million payment to biotechnology company Genesis Research and Development Corp for its BioJoule shares has been delayed for a second time.
The sale of BioJoule, which is developing and commercialising technology to grow and refine biomass such as shrubby willow into fuel and chemicals, was announced
more than a year ago.
It was bought by Singapore-based renewable energy company Pure Power Global (PPG) for $6 million and 1.2 million shares in PPG, with Genesis to receive cash benefits of $3.9 million.
A final payment of $2m to Genesis was due to be paid last August but was deferred from then until last month.
But today Genesis said difficult financial market conditions had prevented PPG raising sufficient funds to repay Genesis the outstanding debt of $2m plus accrued interest.
Genesis chief executive Stephen Hall said that under the sale and purchase agreements with PPG, Genesis and the other vendors had the right to resume ownership of the shares in BioJoule that were sold to PPG.
"At this stage we have not exercised that right as we continue to discuss a resolution of the matter with PPG," Mr Hall said.
It was hard to tell whether the money would be paid.
"In today's market conditions, until deals are signed and money's in the bank it's very hard. So, whilst they're working hard to achieve funding, until it actually happens I don't want to predict it," he said.
Another purchaser was a possibility, but in current conditions all potential buyers were more cautious, conservative and slower to react, so it was not a simple situation.
"Clearly, it's a substantial sum in comparison to our other reserves of funds, so it does have a potentially significant impact and it means it's more urgent for us to obtain other funding," Mr Hall said.
As a result of Genesis' limited cash reserves, accounting standards for the going concern assumption would not be satisfied for the financial report as at December 31, 2008, although sufficient funds were available for the next half year.
Genesis was considering opportunities to raise capital from existing shareholders and new investors. Further information about capital raising was expected next month.
Mr Hall said other industry deals were also a possibility.
Genesis shares last traded at a year-low 9c on Wednesday, down from 24c a year ago.
- NZPA
