ENE 0.00% 14.0¢ enevis limited

ml research & significant announcement.

  1. 635 Posts.
    New CEO for Energy Developments/SWERF Update.
    Merrill Lynch : "We value this business alone at $4.11ps, net of all debt"
    ENE currently trading around $2.22 - quite a discount to the ML valuation.
    Once the market digest this announcement we should see the stock re-valued.
    ............................................................................
    ML Research:
    Energy Developments Ltd

    Changing of the guard
    Reason for Report: Company update
    EDL has announced that co-founder Paul Whiteman has stepped down as CEO effective immediately. He will remain as a non-executive director and will focus on bringing the Solid Waste and Energy Recycling Facility (SWERF) project at Whytes Gully to commercial operation and "strategic Energy opportunities".
    The company has also advised: 1) that it intends to seek joint venture partners for its SWERF technology; 2) it will focus on bringing the Whytes Gully plant to commercialisation without the secondary Char Gasifier; and 3) the restructuring will allow it to more readily devote capital and expertise to its core energy business.
    While the departure of a company's founder is always a matter for concern, particularly one with Mr Whiteman's undoubted technical skills, we view the other three initiatives as very positive.
    The focus on the commercialisation of the SWERF facility at Whytes Gully without the Char Gasifier could deliver some near confidence in the process, albeit with lower diversion from landfill. The search for the "Holy Grail" of 90+% diversion can always be renewed later.
    The seeking of a joint venture partner to further develop SWERF provides for greater capital flexibility and possibly opportunites. It would also provide "value discovery", which would be a major positive at almost any price based on our belief that the market is applying a negative valuation. We have long advocated a JV a waste services company, which would provides project deal flow. Possible partners include Waste Management Inc, Cleanaway and Sita, all of whom EDL already has relationships with. EDL is also looking for partners that can provide technology assistance.
    We are also encouraged by the renewed commitment to and focus on the core energy division. We have highlighted on a number of occasions that this division has delivered strong growth throughout the company's 14- year history. We value this business alone at $4.11ps, net of all debt. A renewed focus here should reinvigorate this growth, and may even turn investors attention back to the inherent value in this business.

    BUY
    Investment Opinion: C-1-9
    Volatility Risk: HIGH
    Price: A$2.32
    ML Ticker: EYDVF
    Price Objective: A$3.50 (28-Oct-2002)
    Stuart B. Smith
    ------------------------------------------------------
    Company Announcement

    New CEO for Energy Developments/SWERF Update

    ENERGY DEVELOPMENTS LIMITED 2002-11-28
    ASX-SIGNAL-G
    HOMEX - Brisbane

    Mr Paul Whiteman has today stepped down as Chief Executive of Energy
    Developments Limited. Mr Whiteman will remain as a non-executive
    director, and has been retained to focus on concluding the programme
    to bring the Company's SWERF(R) facility at Whytes Gully near
    Wollongong to commercial operation and strategic Energy
    opportunities.

    Mr Chris Laurie, a non-executive director of EDL, and presently Chief
    Executive of Orion New Zealand Limited, has been appointed acting
    Chief Executive while the Company seeks to recruit a permanent
    replacement for Mr Whiteman. Mr Laurie will divide his time between
    his responsibilities at Orion and EDL in the interim. Orion presently
    holds 9.99% of the share capital of EDL.

    As previously advised, the Company has now prioritised bringing the
    Whytes Gully SWERF(R) plant to commercialisation without the
    secondary char gasification unit which has been the primary cause of
    recent development delays. Expenditure on other SWERF(R) development
    and marketing activities will be strictly limited until this has
    occurred.

    The Company's assessment remains that the SWERF(R) process has
    outstanding economic potential. In order to realise SWERF(R)
    potential, the Company plans to restructure its SWERF(R) investment,
    and will seek to invite other parties into the project who can assist
    with both its technical development and the funding requirements for
    plant rollout.

    The Company believes that a partial sell down to a partner will both
    demonstrate the value of SWERF(R) and ensure the Company is best
    positioned to capture that value. The restructuring is to proceed in
    step with moving to commercial operations at Whytes Gully with
    invitation documentation now under development.

    With this restructuring, EDL will more readily be able to devote
    capital and expertise into the continued development of its core
    energy business. Since 1993 these businesses have delivered EDL a
    compound annual earnings growth rate of 31%, along with consistent
    cash flow. There is further considerable growth potential in these
    areas, with significant new opportunities identified in both
    Australia and overseas. Core energy projects today represent 80% of
    the Company's asset base.

    The Chairman of Energy Developments, Mr Richard Denton, acknowledged
    the enormous contribution that Paul Whiteman had made as one of the
    founders of Energy Developments, and looked forward to Mr Whiteman's
    continuing contribution to the Company in what will be his
    significant role in the commercial development of SWERF(R).

    For further enquiries in relation to the CEO announcement please
    contact Mr Richard Denton, CHAIRMAN on 61 7 3275 5650.

    For further enquiries on SWERF(R) please contact Mr Greg Pritchard,
    FINANCE DIRECTOR on 61 7 3275 5550.



 
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