Tersus Energy - Alternative Energy Opportunity

RNS Number:1498W


Tersus Energy Plc
23 December 2005




Not for release, publication or distribution in the United States

Tersus Energy plc
("Tersus Energy" or the "Company")

Issue of Equity


Tersus Energy today announces it has conditionally raised GBP4 million (before
expenses) in a placing with institutional and other investors. Having
established its three operating businesses since its AIM IPO in February 2005:
Tersus Energy Controls, Tersus BioEnergy and Tersus Asian Renewables, Tersus
Energy intends that the funds raised will be used to make up to seven
investments across these business units. Whilst in certain cases term sheets
have been signed, execution of all of the transactions is conditional upon board
approval, finalisation of due diligence and negotiation of full form legal
documentation. Further information on the status of the negotiations relating to
these proposed investments are set out under "Intended Investments" below.


The Company has conditionally placed 11,111,112 new ordinary shares of 0.5p each
("Ordinary Shares") (the "Placing Shares") at 36 pence each to raise
approximately GBP4 million (before expenses) for the Company (the "Placing"). KBC
Peel Hunt Ltd is acting as Nominated adviser and broker.


The following is a summary of the proposed investee entities, which should be
read in conjunction with the remainder of this announcement:



Tersus Energy Controls:

- Company "A", a US-based developer of controllers for shunt and series
DC motors. In the view of the Board of Tersus Energy, Company "A" offers
potential product distribution and cost synergies with Navitas Technologies,
the first acquisition within Tersus Energy Controls.


- Thor, a US-based developer of brushless DC ("BLDC") motor and
controller technology. The Board considers that Thor offers potential R&D
collaboration with Navitas Technologies.


- World Energy Labs, a US based developer of battery (electrochemical)
diagnostics technology targeting 'mission-critical' users of batteries e.g.
utilities, telecommunications, UPS users and hospitals.


- Company "E", a US-based developer of energy and environmental
information management software. Company "E" represents Tersus Energy's
first proposed investment into stationary (as opposed to mobile) energy
controls.


Tersus BioEnergy:

- Enviro-Controls, a UK-based developer of proprietary thermophilic
anaerobic digestion technologies and projects. The potential investment
includes a joint project development agreement giving Tersus Energy
developer project equity and the right to invest equity in projects and
earn developer's equity.


- West Lorne Cogeneration, DynaMotive Energy Systems' first commercial
plant in West Lorne, Ontario, using DynaMotive's technology to convert wood
waste to BioOil and Char and for the generation of clean electricity and
steam.


Tersus Asian Renewables:


- Options over Tang Wind Energy's limited partnership interests affording
an exposure to HT Blade, one of China's largest domestic developers and
manufacturers of wind blades.


Commenting on the transaction, Steven Levine, Chief Executive Officer said:


"This fundraising represents the next step in building upon the foundations laid
by our IPO in February, and the establishment of our three operating businesses:
Tersus Energy Controls, Tersus BioEnergy and, Tersus Asian Renewables. The
acquisitions and investments we have selected should, if completed, enable us to
grow our three business units."


Enquiries:
Tersus Energy plc 020 7408 5420
Steven Levine, Chief Executive Officer
David Wilson, Finance Director

KBC Peel Hunt Ltd 020 7418 8900
Jonathan Marren
David Anderson

M Communications 020 7153 1540
Patrick d'Ancona
Nick Fox


Notes to Editors:


About Tersus Energy plc


Tersus Energy, which floated on AIM in February 2005, is building three
operating businesses:


- Tersus Energy Controls. Formed to exploit the opportunity presented by
the increasing focus on energy efficiency and management of electricity
consumption. Tersus Energy is focusing on mobile applications (eg. electric
vehicles, AGVs, fork lifts, fuel cells, hybrids) and stationary
applications (eg. building controls, energy management information). Its
first investment is Navitas Technologies. The aim of Tersus Energy Controls
is to build an earnings based business of some scale.


- Tersus BioEnergy. Formed to exploit the accelerating demand for
alternative fuel based supply of energy. Tersus BioEnergy is focusing on
biofuels (bioethanol and biodiesel) and electricity produced from forest,
agricultural, municipal and industrial waste. It intends to develop, manage
and invest into a stream of projects with our chosen Joint Venture
partners, growing in scale over time. Its first strategic relationship is
with Dynamotive Energy Systems Corporation. DynaMotive's technology
economically converts biomass into a renewable, environmentally friendly
fuel. DynaMotive has successfully demonstrated conversion of these residues
into fuel known as BioOil, as well as char.


- Tersus Asian Renewables. Formed to exploit the demand for renewable
energy in Asia. Tersus Asian Renewables is focusing on wind, biomass and
clean coal, principally in China and India. It intends to develop, manage
and invest into the project streams of our chosen Joint Venture partners,
growing in scale over time. Tersus Energy's first strategic relationships
are with Tang Group and Synergy and it is actively pursuing other
opportunities.


Tersus Energy's business model which aims to operate across a number of
platforms in what it believes to be the most attractive areas of the market,
should in the view of the Directors, achieve risk diversification not available
to single platform companies.


Details of the Placing

Pursuant to the terms of a placing agreement between the Company and KBC Peel
Hunt Ltd ("KBC Peel Hunt"), KBC Peel Hunt has, as agent for the Company, agreed
conditionally to place 11,111,112 Placing Shares with institutional and other
investors at 36 pence per share. As part of the Placing, the management will in
aggregate be subscribing for 277,778 Placing Shares under the terms of the
Placing.


Of this Placing with management, John Devaney, the Non-executive Chairman and
David Wilson, the Finance Director, has each agreed to subscribe for 83,333
Placing Shares at the Placing Price representing 0.22 per cent. each of the
issued share capital as enlarged by the Placing ("Enlarged Issued Share
Capital").


Following completion of the Placing, John Devaney and David Wilson will own
133,333 Ordinary Shares and 134,771 Ordinary Shares respectively representing
approximately 0.35 per cent. and 0.36 per cent. respectively of the Enlarged
Issued Share Capital.


The Placing price of 36 pence per Ordinary Share represents a discount of
approximately 11.1 per cent. to the closing mid-market price of 40.5 pence per
Ordinary Share on 22 December 2005 being the last dealing day prior to this
announcement.


The issue of the Placing Shares is conditional, inter alia, upon Admission to
AIM of the Placing Shares. Application has been made to London Stock Exchange
plc for the Placing Shares to be admitted to trading on AIM. The Placing Shares
are expected to be admitted to AIM and to commence trading at 08:00 a.m. on 30
December 2005.


Intended investments


It is intended the funds raised will be used to make up to seven investments
across the three business units. Whilst in certain cases term sheets have been
signed, execution of all of the transactions is conditional upon board approval,
finalisation of due diligence and negotiation of full form legal documentation.


The Company has been in active negotiations in relation to each of the proposed
investee entities and the status of these negotiations is set out below. Whilst
it is the current expectation of the Directors that the Company should be able
to make the investments as anticipated, there can be no guarantee that this will
occur nor that the investments will be made on the same or equivalent terms as
described below.


The Company will make an announcement via a recognised information service once
terms for each of the investments are finally agreed.


Tersus Energy Controls:


Company "A"

Company "A" is a US-based developer of controllers for shunt and series DC
motors. There are a number of potential synergies between Company "A" and
Navitas Technologies (a wholly-owned subsidiary of Tersus Energy) including
complementary distribution channels and portfolio of products, combination of R&
D and applications engineering expertise, manufacturing synergies and the
possibility of leveraging marketing and sales staff. Tersus Energy has agreed in
principle to invest US$1.0 million for a 30 per cent. stake in Company "A".


Thor

Thor is a US-based developer of brushless DC ("BLDC") motor and controller
technology. The BLDC solution is considered by the Company to be more efficient
than traditional AC motors, can deliver twice the power and is approximately
half the size of such traditional motors. The initial target market is that of
industrial tools where the BLDC advantages of weight, reliability and efficiency
can be leveraged. Subsequent markets include heating, ventilation and air
conditioning (HVAC), refrigeration and industrial processes. The Company also
believes that such technology could serve as a platform for the development of
brushless motors and/or controllers for the vehicle market. Tersus Energy is
(MORE TO FOLLOW) Dow Jones Newswires

23-12-05 0701GMT

23 Dec 2005 07:01 GMT DJ Tersus Energy Plc Issue of Equity -2-
Prev

negotiating an investment of US$100,000 for an expected 6 per cent. stake in
Thor which is expected to be matched by the Ben Franklin Fund.


World Energy Labs

World Energy Labs is a US-based developer of advanced diagnostic technologies
for evaluating certain parameters of energy storage and energy conversion
devices (typically batteries) as well as electrochemical systems. The target
markets are those users of batteries, such as telecommunications providers and
hospitals, where the devices' integrity is critical. Tersus Energy has entered
into a term sheet which provides for the Company to acquire a 5 per cent. stake
in World Energy Labs costing US$1.0 million. The deal also gives the Company two
options over a further 5 and 10 per cent of the equity.


Company "E"

Company "E" is a US-based developer of energy and environmental information
software. Its software has been rolled out to over 100 utilities and large
commercial, industrial, government and institutional clients. Tersus Energy is
negotiating terms in principle in which it is proposed that it would acquire
Company "E" for US$2.0 million, of which it is proposed that US$1.7 million of
the consideration would be met with cash and the remaining US$0.3 million in
Ordinary Shares.


Tersus BioEnergy:


Enviro-Controls

Enviro-Controls is a UK-based developer of proprietary thermophilic anaerobic
digestion technologies and projects used to convert organic waste into
environmentally useful materials, including high-quality organic fertiliser, and
methane gas. The company currently has two successful pilot plants, one in the
UK and one in US. Enviro-Controls has a pipeline of ten-plus projects in the UK,
US and Asia. Tersus Energy is in negotiations with view to agreeing a three part
arrangement: (i) US$350,000 to be invested, (ii) an arrangement to secure the
pipeline of projects and (iii) a joint development agreement which would give
the Company the right to invest equity in projects.


West Lorne BioOil Cogeneration

Through the Company's investment in the NASDAQ-OTC traded DynaMotive Energy
Systems, Inc., which is considered by the Board to be a market leader in the
biomass to energy market, Tersus Energy has proposed an investment of US$1.0
million for a 20 per cent. stake in its first plant subject to operating due
diligence and final terms. The first commercial plant is at the Erie Flooring
production facility (steam and electricity taker) in West Lorne, Ontario. The
West Lorne plant is understood to have the capacity to convert 100 tonnes per
day of wood residue into approximately 70 tonnes of BioOil and 20 tonnes of char
fuel making it, in the view of the Board, one of the world's largest pyrolysis
plant and the first BioOil-fuelled cogeneration facility. The plant, as at the
time of this announcement, is physically complete and in the late stages of
commissioning. Contractual arrangements between West Lorne and off-takers are
currently in negotiation.


The proposed terms of investment in West Lorne would, in the view of the Board,
if implemented provide a 20 per cent. internal rate of return (IRR) to the
Company. This IRR is based upon a number of assumptions and there can be no
guarantee that such return will in fact be generated by such investment should
it be made.


Tersus Asian Renewables:


Tang Wind Energy

Tersus Energy has obtained options over 25 per cent. of the total limited
partnership interests in Tang Wind Energy LP thus affording exposure to Tang
Wind Energy's 25 per cent. interest in HT Blade. HT Blade is one of China's
largest domestic developers and manufacturers of wind blades. HT Blade was
incorporated in China in 2001 as a China/US co-operative joint venture and
primarily serves China. However, the Directors consider, that HT Blade has the
potential to expand its sales to other selected Asian markets. The option is in
three tranches. The first tranche exercise price is $2 million. The remaining
tranches have been determined by reference to a higher valuation and the
aggregate exercise price amounts to $4 million. HT Blade's majority Chinese
shareholder has indicated that there is an intention to float HT Blade on a
public market at some point in the future.



Update on Navitas Technologies


Navitas Technologies Ltd ("Navitas Technologies") became wholly owned by the
Company in May 2005 and is focused on the development and manufacture of high
performance microprocessor-based electronic controls systems for a wide variety
of electric vehicles, with applications in hybrid car and fuel cell
technologies.


Since its acquisition, Tersus Energy has been able to implement a number of
improvements throughout the Navitas Technologies business that have resulted in
the company turning from being loss making to profitable.


The Board estimates that Navitas Technologies has a value of $5-6 million
assuming a multiple of 10 (which the Board considers to be reasonable) being
applied to 2006 expected earnings before interest and taxation. It should be
noted that this is the Board's own estimate and has not been independently
verified and that it is not intended to comprise a profit forecast or any
assurance that such earnings and valuation will be achieved.


Update on other holdings


The Company remains of the view that the enterprise value of its other portfolio
holdings is at or in excess of the value upon its listing on AIM in February
2005.


The information contained herein is not for publication or distribution into the
United States. The material herein is for information purposes only and is not
intended, and should not be construed, as an offer of securities for sale into
the United States. The securities of the Company described herein have not been
and will not be registered under the US Securities Act of 1933, as amended (the
"Securities Act"), or the laws of any state, and may not be offered or sold
within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
and applicable state laws. There is no intention to register any portion of the
offering in the United States or conduct a public offering of securities in the
United States.


END




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