Shares digital

Trading in the shares of beleaguered carbon emission reduction company AgCert International (AGC) have been suspended at 0.68p after the Irish company failed to seal an agreement with creditors, and customers towards contracts that it could not to deliver.

AgCert’s board filed a petition into ‘examinership’, roughly the Irish equivalent of the US Chapter 11, which means the company is put under the protection of the High Court in Ireland while it negotiates an agreement with its creditors and shareholders.

The company is still formally conducting its business and trying to solve its contract issues, but it is not clear whether the shares will be added back to the list at any point. The shares staged a spectacular rise and fall since the float in the second half of 2005. They peaked at 270p in May 2006 but started a steady fall subsequently as brokers downgraded their forecasts and fears grew that it would not be able to deliver.

AgCert sparked much enthusiasm after the float about its business model, which consisted of selling agriculturally derived carbon emission reduction certificates (CERs), which are UN-certified permits for companies to pursue polluting activities.

The Irish company had sites in Mexico and Brazil near to livestock farms. Having agreed contracts with the farmers, the plan for AgCert was to convert methane produced within the farming operation into power or to flare it off. This would then earn the company CERs that could be sold to other firms. However, it turned out that due to several factors there were enormous variations in the amount of gas that could be extracted and processed at each farm. This in turn meant the company’s revenue forecasts had to be changed on the way, as did its whole business plan.

AgCert has interrupted its adventure on the stock market with more than 600 installations producing CERs, however it said its ‘forward sales commitments exceed production capacity’. The plan was for AgCert to become cash positive by the end of 2007 and to have 1,500 projects by the end of 2009. Deals with blue-chip customers reinforced investors' confidence but earlier last year it became apparent that the company would struggle to meet customer demand, and brokers started to slash their optimistic target prices.

The management kept quite upbeat, however, and just over a year ago secured a debt facility with New York-based investment firm Laurus. A takeover bid initially supported the shares in March 2007 but takeover discussions were terminated promptly. AgCert then raised £20.5 million through a placing at the end of April last year, but the dive in the share price did not stop as the company admitted it had fallen short of its targets.

Shares says: The CER market has still to come of age, but alternative operators might be a better bet than AgCert.