CarbonScape seeks $1.5mln from crowd with 'green coke' offer

Thursday 23rd October 2014

CarbonScape, which makes "green" coking charcoal, wants to raise as much as $1.5 million from equity crowd funding to commercialise its product for the steel manufacturing market.

The Christchurch-based company has a minimum target of $400,000 on the Snowball Effect platform, with a funding cap of $1.5 million, and is hoping to lure investors offering shares at 20 cents apiece with a minimum investment of $1,000. The offer values CarbonScape at $8.86 million, and would see between 4.3 percent and 11.4 percent sold to the crowd, according to its offer.

Since it launched this morning, 11 investors have pledged $32,000, or 8 percent of its minimum target.

CarbonScape makes "green coke" from forestry waste as an alternative to traditional mineral coke, like coal, used in the steel industry. The business is looking to commercialise the product to capture a shift in the steel industry to more sustainable, fossil-fuel free production.

New Zealand Steel, a subsidiary of Australia's BlueScope Steel, will be CarbonScape's first formal customer to take test samples of the green coke 12 months after the business secures its development capital.

With the minimum amount raised, CarbonScape will spend $132,000 on research and development, $90,000 on a green coke pilot plant design, $55,000 on two non-executive directors and $10,000 on lodging a new patent.

The company flagged a possible $70,000 would be spent on a New Zealand Alternative Index reverse listing, which would go to the pilot plant if its compliance listing plans didn't go ahead, according to its offer documents.

Should the company secure more than the minimum amount, it will spend more on research and development, the appointment of a process engineer and business development manager, the construction of a 80 tonne capacity green coke plant to supply NZ Steel, and lodging a further two patents.

According to its forecasts based on the supply of 9,000 tonnes of green coke to NZ Steel, the business sees itself making an earnings before interest, tax, depreciation and amortisation loss of $484,000 in 2015, before turning to an Ebitda profit of $3.1 million on sales of $6.9 million in 2016. In 2017 it expects Ebitda of $5.5 million on $10.5 million in sales, and in 2018 it expects earnings to be $5.6 million on revenue of $10.7 million.

By 2021, the company projects revenue to have grown to $83 million, for a valuation of $415 million, on a realistic outlook. The company makes no mention of dividends in its offer documents or shareholders agreement.

As at March 31 this year it had $4,737 cash on hand, which had increased to $105,000 at Sept. 30. Shareholders' equity was $195,043 as at Sept. 30.

The capital raised via Snowball is part of the company's wider financing plan to secure $3.5 million over the next 12 months, and it has already raise $2.9 million from previous offshore investors, it said.

Snowball is licensed under the new Financial Markets Conduct Act, which came into effect on April 1, providing a regime where projects can raise a maximum of $2 million, offering equity through crowd-sourcing platforms. The licensing is part of the Financial Markets Authority's expanded brief to bolster New Zealand's capital markets, but the new platforms do carry risks for investors, with reduced compliance obligations for small capital raisings compared to companies listed on the NZX mainboard.

CarbonScape is Snowball's third equity crowd funding offer. It follows the success of Blenheim boutique brewer, Renaissance, which raised its maximum $700,000 of new capital from 287 investors in one and a half weeks and 'The Patriarch' a new film to be directed by Lee Tamahori, which raised $453,800 from 181 people, just shy of its maximum $500,000 target.

Meanwhile, Pledge Me, the country's only other licensed equity crowd-funding platform, launched its first two equity offers on Sept. 26, giving investors the chance to buy into New Zealand's first computer museum, backed by Apple Inc co-founder Steve Wozniak, and a hovercraft ferry in the South Island.

Techvana Operating, which is looking to raise a minimum of $250,000 and up to $750,000 to secure a location and build New Zealand’s first computer museum in Auckland, has so far raised $4,000 from 20 pledgers. The second offer, H2Explore, has raised $6,350 of its minimum target of $250,000, from 26 pledgers so far. The tourist operation is looking for up to $300,000 to build a Twizel-based hovercraft to ferry tourists across the Tasman river and Lake Pukaki.

CarbonScape's offer closes on Dec. 7, while H2Explore finishes on Nov. 11 and Techvana wraps up on Nov. 27.

BusinessDesk.co.nz

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