Tuesday, October 8, 2019

News: Xeros tanning business spun-out to management team


Xeros Technology Group plc, the Rotherham-based developer and provider of water saving and filtration technologies with multiple commercial applications, has spun out its Qualus tanning business operations to its management team in exchange for an exclusive worldwide licensing and royalty agreement.

Based on the Advanced Manufacturing Park (AMP), Xeros is a Leeds University spin-out that has developed a patented system using a unique method of special polymer beads rather than the usual large amounts of fresh water to clean clothes.

Xeros is moving to a IP rich and asset light business model with the majority of revenue derived from high margin licensing agreements.

The Qualus management team has formed a new company, ESTR Limited (ESTR), which has acquired the physical assets associated with the business, its contracts including the LEFARC agreement and the brand "Qualus".

Xeros has provided ESTR with a capped convertible loan facility in order to fund the business until the end of December 2019. The management team plan to raise further financing to fully commercialise the business.

ESTR has the exclusive rights for the use of Xeros' patents in the tanning market and will pay the Group a royalty on its worldwide income in respect of these patents. Royalty levels, which are subject to contractual minimums from 2022 onwards, are in line with Xeros' expectations for this application.


This spin-out will reduce the Group's cost base beyond December 2019 as part of the previously communicated intention to be a pure play licensing company with a monthly cash burn rate of £0.6m per month from January 2020.

In the event that ESTR does not meet its contractual obligations, the licensing rights revert back to Xeros.

Mark Nichols, Chief Executive of Xeros, said: "This agreement is another milestone in the migration of Xeros to a pure-play licensing and royalty business and will further reduce our cost base.

"ESTR is best placed to commercialise our tanning patents. The team has the expertise and credibility both to execute existing and future contracts and to raise the finance required to take the business forward."

Xeros website
Qualus website

Images: LEFARC


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