Entyr’s Recapitalisation Hinges on Shareholder Approval and Market Conditions

Background and Context

Entyr Limited, a pioneer in sustainable waste tyre recycling technology, has announced a comprehensive recapitalisation proposal following its voluntary administration earlier in 2024. The company’s shares have been suspended from the ASX since March 2024, and this capital raising initiative is a critical step towards reinstatement to trading.

Entyr’s unique thermal desorption technology offers an environmentally friendly solution to the global waste tyre problem by recovering valuable resources such as recovered carbon black (rCB), tyre derived oil (TDO), and steel. The company’s operations are centred at its Stapylton, Queensland facility, which is poised to process up to 20,000 tonnes of waste tyres annually once fully operational.

Details of the Capital Raising

The recapitalisation comprises a Share Purchase Plan (SPP) and a Placement Offer. The SPP invites eligible shareholders to subscribe for up to $50,000 worth of new shares at an issue price of $0.20 each, with one free attaching option for every two shares subscribed, aiming to raise up to $1 million. The Placement Offer targets institutional investors for 42.5 million new shares at the same price, with a similar option attachment, to raise $8.5 million.

Both offers are subject to shareholder approval at a general meeting scheduled for February 21, 2025, and the successful completion of the Deed of Company Arrangement (DOCA) conditions. The new options will expire 12 months after issue and carry an exercise price of $0.20.

Debt Restructuring and Offtake Agreements

Alongside the capital raise, Entyr is restructuring its secured debt with the Proponent, Avior Asset Management No. 5 Pty Ltd. The existing $6.5 million debt will be extended to mature on December 20, 2026, with repayments planned from anticipated R&D tax incentive claims over the next three years. A convertible note capped at $3.7 million will be issued to the Proponent, allowing conversion to equity at a minimum price of $0.24 per share if any debt remains unpaid at maturity.

Entyr has also secured key offtake and tyre supply agreements to underpin its revenue streams through 2025. The Austek Supply Agreement guarantees purchase of up to 1,000 tonnes of rCB annually and 2 million litres of TDO at fixed prices. The Trafigura Offtake Agreement has been varied to carve out the Austek supply and includes provisions for TDO sales. Additionally, a two-year tyre supply contract ensures feedstock availability for the Stapylton facility.

Strategic Outlook and Risks

Post recapitalisation, Entyr aims to streamline operations, focusing on two Thermal Desorption Units (TDUs) rather than the previously planned four, reducing costs and improving operational efficiency. The company is actively pursuing product trials to validate the quality of its recovered carbon black for use in tyre manufacturing and other industrial applications.

However, the recapitalisation is not without risks. The company remains in a pro-forma net liability position, with significant impairments recorded against intellectual property and assets. The success of the capital raise, DOCA effectuation, and ASX reinstatement are all contingent on shareholder approval and market conditions. What's more, the company faces operational, regulatory, and commercialisation risks inherent in its industry and technology.

Entyr’s management team, led by Executive Chairman Dermott Mcveigh, is focused on executing the recapitalisation and returning the company to a sustainable growth trajectory.