Carnegie waves in the administrators
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After 20 years of trying to make wave power work on the ASX, Carnegie Clean Energy (ASX:CCE) has called in the administrators.
Carnegie’s options were limited after the West Australian government pulled the plug on a $16 million funding deal signed in 2017, this week.
The company has voluntarily called in Richard Tucker and John Bumbak of KordaMentha Restructuring to sort out its business as well as that of subsidiaries EMC Co, Energy Made Clean and EMC Engineering Australia.
They are in talks to secure funding to allow the wave power tech developer to continue to trade while they look for a recapitalisation plan.
Carnegie has been suspended from the ASX since the start of March for failing to lodge its accounts.
The numbers were finally released two weeks ago, and revealed a heavy impairment charge on Carnegie’s core asset — its CETO Technology ocean wave conversion system.
The company booked a $32.4 million write-down on CETO since June 30, leaving its carrying value at just $15m. Eighteen months earlier in June 2017, the asset was valued at $83m.
Carnegie has been in trouble for some time.
A plan to offload the solar Energy Made Clean business to Tag Pacific (ASX:MPR), in order to return to being a pure wave power company, came unstuck when then-CEO Mike Ottaviano was booted out.
Mr Ottaviano told Stockhead at the start of the process that while Energy Made Clean was throwing off about $15 million in cash, it wasn’t profitable.
They had the choice of doubling down on that unit themselves, or selling it to another company specialising in the microgrid and energy storage area.
Another factor was the fact that once a company starts making more than $20 million a year it loses access to the tax rebate scheme, which Carnegie needs to fund the wave tech research.
The new CEO Jonathan Fievez set about renegotiating the $4.1m deal, but the delay meant certain conditions couldn’t be met and Tag didn’t want to extend the process any longer. The deal was cancelled.
The government’s R&D tax rebate changes in May last year were a last straw, which capped tax rebates on R&D costs for non-biotechs after previously allowing tax breaks of $16m per year.