Carnegie EMC sale falls over

CARNEGIE Clean Energy is in deepwater again this week after its move to sell subsidiary Energy Made Clean to Tag Pacific fell apart, after Tag failed to raise just $4 million to fund the merger.
Carnegie EMC sale falls over  Carnegie EMC sale falls over  Carnegie EMC sale falls over  Carnegie EMC sale falls over  Carnegie EMC sale falls over

Image courtesy of Carnegie Clean Energy

 
Investor discontent, questions in Western Australia's parliament, a series of executive resignations and financial problems have plagued Carnegie this year, and now the transaction that the company was depending on as its saving grace has fallen over, leaving the company red-faced and pondering what the future holds as it scrambles to pick up the pieces. 
 
It has been a tempestuous 12 months for the company, which is developing the Albany wave project in WA, after it unsuccessfully attempted to expand into hybrid solar through the acquisition of EMC, only to quickly offer the company for less than it paid.
 
Carnegie had planned to detach itself from the costly subsidiary, which has been dragging it down all year, but with Tag out of the picture the company will be required to hunt for another buyer. 
 
Today's announcement that the transaction with Tag had been terminated set the mood for this afternoon's annual general meeting, which saw yet another director of the company, Mark Woodall,  jump ship. 
 
"This year has been a turbulent one for me, my fellow board members and for the business," Carnegie chairman Terry Stinson told shareholders today. 
 
"The cost of this failure to the business and to shareholders was high … commercially it would be an understatement to say that Carnegie failed to deliver on expectations."
 
Stinson is not wrong and the shareprice tells the tale. Earlier this year Carnegie was trading at A5.7c, and now the market value of the company's shares is just 0.7c. 
 
With just $10 million in revenue the company lost $63 million - including a $35 million writedown of intangibles. Over the remainder of this financial year the company expects the losses to continue, albeit not at the same magnitude. 
 
It has not just been EMC that has caused trouble for the renewable energy company, once named one of Australia's most innovative companies by the Australian Financial Review. 
 
The last three months have seen the company sidelined by changes to the Federal government's Research and Development tax incentive which has put a cloud over its wave technology development in Western Australia. 
 
In late October, on a Friday after the market had closed, Carnegie then posted a major project update confirming it had missed the first key milestone of the development of its government funded Albany Wave project. 
 
At that time, the company also announced that CEO Mike Ottaviano had resigned effective immediately, the fifth high-level executive to abandon ship over the last 12 months.
 
WA government concerns that the company might not deliver on the project, which was an election promise during the last state election, meant regional development minister Alannah MacTiernan was forced to meet with directors last month for reassurance.
 
Carnegie will battle on, Stinson told shareholders today. 
 
"I understand and accept that shareholders have already invested and are understandably disappointed," he said. 
 
"We are not there yet, we must continue to transition the hybrid solar business and manage the legacy costs and put our full focus on wave and marine energy development."
 
"The future of wave and marine energy research, development and commercialisation will require continued financial support from our shareholders and funders."
 
Energy News sought comment from Carnegie, however the company was unable to respond by the time this article was published. 
 
Tag Pacific was down more than 13% at 6c on the news.