Thursday, August 15, 2019

News: Details of Metalysis administration revealed


The results of the administration of Metalysis Ltd, the innovative Rotherham-based company, included 47 redundancies and around £8m owed to creditors, on top of the millions secured over the years from investors who are unlikely to now see a return.

The game-changing technology and multi-million pound Rotherham facilities are now owned by a Maltese-headquartered mining group.

The Manvers company held the worldwide exploitation rights to the FCC Cambridge process which sees specialist powder metals created in a simple, cost effective process with significant environmental benefits. With a Materials Discovery Centre on the Advanced Manufacturing Park (AMP), also in Rotherham, the firm raised millions for research and to build towards commercial production.

Administrators were brought in after the firm, which employed 60 staff, experienced financial difficulties predominantly due to an extended recent investment round. Metalysis was acquired last month by Power Resources Group, a metallic materials science company which operates in Rwanda and Macedonia.

Metalysis was pre-revenue and had recently successfully got up to industrial scale with its fourth generation plant (Gen4), creating tonnes of high value metals.

Documents filed by joint administrators Eddie Williams and Chris Petts of Grant Thornton UK LLP show that the terms of a loan from US venture capital firm, Hercules, and pressure from HMRC regarding tax arrears, led to bosses of the Cambridge University spinout seeking buyers and eventually placing the business into administration.

The documents state: "In order to reach the stage were the technology could be fully commercialised, the directors actively sought to raise further equity, of c£15m. The business plan was to utilise these proceeds to continue research and development, or possible production of further Gen4 machines, which in turn would generate revenue. The plan was for the business to be breakeven within three years.

"This fundraising continued for 12 months prior to the company's administration, but was not successful for a number of reasons."


Existing investors, which included Woodford Investment Management and Australian minerals firm, Iluka Resources Limited, were no longer in a position to invest and problems were incurred over the complex share structure, the complex technology and that much of the funding was for working capital.

A 2018 fundraising of £12m included a $7.5m loan from Hercules Capital which included a covenant that stated that the business must maintain liquidity of at least $2.5m at all times. With cash running out and fund raising unlikely, employees agreed to work a four day week but by April the covenant was breached and discussions over a possible sale and administration began.

Two indicative offers were received in May, but due to short timescales, they did not progress. The documents also show that the Government was approached over providing breaching funds, but they were unable to do so.

With administrators appointed in June, the business continued to trade whilst a buyer was found. Indeed, turning off the Gen4 machine may have led to significant costs in restarting it.

No interested parties offered any working capital and so 37 redundancies were made on June 14. 49 redundancies were made in total.

Of the two indicative offers, the higher did not progress and four further offers for the business and assets were received. Working quickly, the bid from Power Resources Group was accepted and the $2.5m deal included the transfer of ten employees.

the successful bid was assessed to offer the best result for the creditors, notably Hercules Capital who stand to get $2m of their $3.7m debt as a secured creditor. Money owed to unsecured creditors stands at £5.8m.

Metalysis website

Images: Metalysis


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