Trading Emissions plc posts 19.2 mln pound H2 liquidation loss

LONDON, March 24 Mon Mar 24, 2014 8:46am EDT

LONDON, March 24 (Reuters) - Clean energy fund Trading Emissions plc (TEP) said asset disposals and writedowns related to the winding up of its business had helped push it into a 19.2 million pound ($31.7 million) loss for the second half of 2013.

Shares in London-listed TEP fell 8 percent to 14.62 pence on Monday after the firm said its net asset value had fallen by 26 percent to 22.38 pence per share in the six months ended Dec. 31, 2013.

"It will be no surprise to shareholders that the private equity and carbon investments are becoming progressively more difficult to sell," the company said in its results on Monday.

TEP, a fund that invests in renewable energy projects and United Nations-backed carbon credits, has been badly hurt by tumbling carbon prices and ongoing issues at several of its facilities.

The struggling firm began selling assets and paying out investors after shareholders voted in December 2012 to wind up the fund.

Its shares have plunged by 83 percent from their 2006 peak, while carbon prices have collapsed by 99 percent since 2008.

TEP said liabilities related to its recently sold portfolio of United Nations carbon credits more than quadrupled to 1.7 million pounds in the second half of 2013 due to a change in its valuation methodology.

TEP announced on March 10 it had signed a deal to sell its existing stock of Certified Emissions Reduction (CER) units and portfolio of 24 credit purchase contracts, known as Emissions Reduction Purchase Agreements (ERPAs), to an unnamed buyer for an undisclosed sum.

The firm invested in low-carbon projects in developing countries through committing to buy CERs at fixed prices that were many times above the credits' current market value.

It has attempted over the past few years to renegotiate those ERPAs, but not all parties have been willing to move to a floating price scheme or terminate the contracts. The company said it has since stopped hedging its fixed-price CER portfolio.

TEP said it received last week a notice of arbitration from two Chinese firms over ERPAs the firm had renegotiated.

The company also said Brazilian biodiesel plant Bionasa, in which it has a 25 percent stake, "remains troubled".

"Operations have ceased, obligations to creditors including banks and employees are in default, legal actions have commenced against the company to recover overdue costs, (and) the commercial and finance directors have resigned," TEP said.

It added, citing local media, that 27 of Brazil's 67 biodiesel plants had shut production due to a national supply glut.

Analysts at Liberum Capital on Monday described TEP's results as "mixed" for investors but forecast that its shares would reach 20 pence, without citing a timeframe.

($1 = 0.6063 British Pounds) (editing by Jane Baird)