Climate consultant sends out share warning

A climate change consultancy that advised the White House today warned shareholders would be left with “little or no value” as it considers its future after failing to find a solution to its balance sheet woes.

Oxfordshire-based AEA Technology – previously part of the old Atomic Energy Authority – said it was looking at all options for the firm, but warned investors could be left with nothing even if it seals a rescue takeover.

AEA has seen its stock market value all but wiped out after taking a gamble on US expansion that failed to pay off. Shares plunged another 75% today.

It has been hit by weaker-than-expected trading at its Washington-based business Project Performance Corporation (PPC) and is now sinking under a £34.3m (€44m) debt pile and £165.5m (€210m) in pension liabilities.

The group said a turnaround plan drawn up by interim chief executive John Lowry - who took over after Andrew McCree quit in the wake of a profits warning in November – was not enough to address the debts and pension costs.

AEA said: “The board has been unable to achieve a long term solution to the existing levels of net debt and the significant ongoing funding costs of the group’s retirement benefit obligations.”

It added: “The board has decided to consider all strategic options to realise value. However, the board does not envisage there will be offers for the share capital of the company and the board expects that such options will result in little or no value for shareholders.”

AEA paid £33.1m (€42m) for PPC in 2008 to gain a slice of climate change consultancy work for the US government at a time when environmental policy was top of the agenda.

The PPC takeover was initially hailed as a success, with the US arm securing major contracts advising the Obama government on how to implement pledges on climate change.

Two years later, AEA bought another US consultancy called ERG in Massachusetts, forking out $83m (€67.5m) in a mammoth reverse takeover for the group.

But the US business has suffered as PPC’s trading was impacted by the late placement of some business and certain orders not being won.

AEA was originally the commercial arm within the UK Atomic Energy Authority and was spun out of the UKAEA in 1994 and floated on the stock market two years later.

Under Mr McCree’s leadership, it began a series of disposals that included its rail division, which made equipment to remove leaves from railway lines, and a radioactive waste packaging division.

It has handled contracts for UK government departments, including the Environment Agency and the Department for Environment, Food and Rural Affairs. It employs around 1,000 consultants.