The Punter last week received 88,333 shares in an environmental services company, free, gratis and for nothing. CO2 Australia began life busily planting native trees as carbon offsets for big companies such as airlines. That business seemed to be too dependent on climate-change policies yo-yoing back and forth, so the company diversified into prawn farming and eventually became the much bigger and ambitious Sea Farms Group (ASX code SFG).
Now SFG has "demerged" the CO2 consulting and carbon-sink business. Getting rid of it was a key condition of an agreement in May with the giant Japanese Nissui seafood company, which is buying 15 per cent of SFG for $24.99 million and undertaking to take a significant percentage of SFG's present and future output of prawns.
Alas, no one wanted to buy the CO2 business, so Sea Farms has simply given it to its shareholders. CO2 Australia has a steady cashflow from managing approximately 26,000 hectares of carbon sink plantings under long-term services agreements with a range of large industrial clients.
It also includes a wide variety of greenhouse emissions-reducing activities, from landfill gas management to regrowth vegetation management in grazing enterprises. These carbon services are largely dependent on the Australian Emissions Reduction Fund.
But the free-standing CO2 Australia has 1,417m shares, and net assets of $3.86m. On that basis the shares are worth in round figures less than a third of a cent. But of the $3.86m in assets, $2.24m are intangibles, which would be worthless if the company got into strife, so on a conservative basis the shares have a net asset value of little over a tenth of a cent each. The demerger, by clearing the way for the Nissui deal, has been good for SFG shares, pushing the Punter's SFG shares into profit, so he can't complain.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
