Eight years after being incorporated, four years after listing on the stock market, three years after winning its first contract, and one year after delisting, Perth company AnaeCo Ltd is close to commercialising its innovative waste treatment technology.
AnaeCo, formerly Organic Resource Technologies Ltd, has been on an extraordinarily long and difficult journey since its founder and managing director, Tom Rudas, developed a new system for processing municipal waste.
Its experience highlights the challenges facing innovative companies that have plenty of engineering and technology expertise but less commercial and financial experience.
Like many businesses, AnaeCo initially thought a listing on the Australian Securities Exchange was a good way to gain capital for its project.
It completed a listing in 2003, raised some capital, and soon after signed a contract with the Western Metropolitan Regional Council to build a waste treatment plant in Shenton Park.
Construction of the plant started in July 2004 but a few months later was put on hold after the company was unable to raise additional funds.
The company spent most of 2004 and 2005 pursuing different funding options and trying to secure a cornerstone investor.
The impediments it encountered included over-expectations about what the company was prepared to give up, such as its intellectual property rights, and a lack of understanding about the waste treatment sector.
In the interim, it was forced to issue convertible notes paying a high interest rate to meet its funding needs.
A big breakthrough came in late 2005 when investment group Perpetual agreed to pump up to $12 million into the company’s waste treatment project.
The Perpetual deal was followed by an agreement to demerge the company from its listed parent, ORT Ltd.
The company also successfully applied for a $2.7 million federal government grant under the renewable energy development initiative program.
The company’s latest fund raising initiative was a $2 million rights issue to existing shareholders, underwritten by Sydney firm Martin Place Securities.
The proceeds will be used to provide working capital and to meet a $1 million bank guarantee needed by AnaeCo so that it can be awarded an engineering contract for the waste treatment plant.
The contract will be awarded by a special purpose project company jointly owned by Perpetual (80 per cent) and AnaeCo (20 per cent).
The prospectus for the rights issue stated that the shares will not be listed on the ASX, though the company has previously advised shareholders that a relisting on the ASX was a key element of its strategy.
