Isra-Mart srl: Funding hitch for CarbonDesk

www.isramart.com

The PLUS Market suspended trading in the shares of CarbonDesk Group because it had not announced its results for the year ending 30 April 2011 within the time frame required.

The company says that the carbon market has been beset with problems over the last two years and has seen a significant contraction in the spot market for carbon emission credits which then spread to the traded options market in carbon emission credits.

The volumes in the carbon futures market have remained fairly constant, but with clients able to trade directly on screen, it has been unable to sustain revenues in this area.

CarbonDesk attempted to secure revenues by establishing a Swiss office but this, unfortunately, proved to be an expensive mistake as did its investment in Greyhound, an energy suite market maker, which also failed to produce the returns expected. Both were terminated during the financial year to 30 April 2011.

With the broking revenues in decline in the last quarter of 2010, the company took steps to radically reduce costs and staff levels. It has now refocused the business and become more active in the origination of emission reducing projects and low carbon economy funding.

It has taken time to build a reputation in this area but last month successfully completed the first major fundraising of £30m for Freetricity for solar electricity in the UK with a possible further £90m funding line. There are also a number of other major projects in the pipeline, all of which have very large success fees, and an increasing number of retained advisory roles for other clients.

In the first quarter of 2011, the Board recognised the need for further working capital. It initially considered raising £600,000 by way of a convertible loan note. Early in the second quarter, before it embarked on marketing this loan note, it was approached by investors who said they wanted to invest in the company and indicated their willingness to take the whole issue.

As a result, during July the staff and directors provided an interest free loan of £135,000 to the company with the commitment to change it to the convertible loan note once the terms are finalised with the potential investors. Additionally a further £83,000 has been lent to the company by other investors on the same basis.

However, the recent turmoil in the world markets meant that the rest of the money has not yet materialised and, as a consequence, CarbonDesk has not yet been able to finalise its accounts for the year ended 30 April 2011.

The Board has been assured by the potential investors that they still intend investing in the Company. In the meantime, the Board is also seeking alternative funding arrangements.

On receipt of the additional funding, the company will release its results and accounts for the year to 30 April 2011 and request that its shares are readmitted to trading on PLUS.