Low Carbon Accelerator Limited ('LCA' or 'the Company') has announced that it has invested a further €570,000 in Energy Cabin GmbH ('Energy Cabin'). LCA has also provided a loan of €30,000 to cover recent restructuring costs. The funding from LCA is part of a wider financing round for Energy Cabin with additional investment of €220,000 being made by other shareholders.
LCA made an initial investment of €2,000,000 on 31st May 2007 for a 23% equity stake. A provision of £557,000 was subsequently made against this investment due to a deterioration in operating performance in 2007 and a dispute over the financial position of the company at the date of LCA's initial investment.
Over the last nine months, Low Carbon Investors Limited, the Company's Investment Manager, has been working hard to stabilise the operating performance of the company. This resulted in the replacement of the management team, reductions to and refocusing of staffing levels, and other measures to reduce operating costs. In April 2008, the shareholding structure of the Company was revised, with LCA's shareholding increasing from 23.0% to 52.3% in return for waiving certain warranty claims against other shareholders. At the same time, two of the other shareholders in Energy Cabin invested, in total, a further €400,000 in the company.
At the time of the restructuring in April 2008, it was known that Energy Cabin would require additional working capital in the Summer of 2008. However, the Investment Manager was not willing to recommend to LCA that further financial support be provided at that time until the new management team had a chance to, inter alia, determine whether there were further historical issues that required resolution and to develop its own financial plan for the company. This process has now been completed to the satisfaction of the Investment Manager.
The additional investment is being made at the same company valuation at which LCA is carrying the investment in its books at 31 May 2008. Following this latest investment, LCA holds a 57.1% equity stake in Energy Cabin.
The investment from LCA will help Energy Cabin develop partner relationships in Europe and overseas, as well as providing working capital to meet growing demand.
Barney Rhys Jones, Investment Officer at Low Carbon Investors, said: "With recent hikes in oil prices there is strong demand for independent, off-grid, low-cost, low-carbon, energy supply. We remain convinced that there is a strong market for Energy Cabin's products and we have been very pleased with the progress that the new management team has made over the last several months."
Alan Gray, CEO of Energy Cabin, said: "We have seen strong, steady growth this year in the UK, Ireland, Germany, and Austria and we look forward to using this investment to build sales channels and distributor relationships."
Energy Cabin is an award winning manufacturer and supplier of free-standing heating systems that combine solar-thermal and biomass combustion to deliver carbon-neutral heating and hot water for domestic, commercial and public customers.
The pre-commissioned units are easily connected to existing systems, either replacing or supplementing the existing boiler. Existing customers include hotels, residential homes, schools, industrial premises, business parks, housing developers and private home-owners including buildings connected to a shared 'heating grid'.
Typical payback times on the system are three to five years, with the solar thermal system providing 'free' hot water for up to six months of the year. The smokeless pellet boiler operates at 92% efficiency and the unit incorporates a sophisticated remotely monitored control system.
The business has seen significant growth since it was founded. Over 100 Energy Cabin units have been installed successfully in locations throughout the EU, providing clean, efficient central heating and hot water to domestic and commercial premises. In addition the business supplies solar-only and solar cooling units.