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$6,048,000
METALS INVESTMENT TRUST LIMITED:
10% SECURED CONVERTIBLE LOAN STOCK
Maturing 15th February 2005
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CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
No securities commission or similar regulatory body has passed upon the merits of the
Secured Convertible Loan Stock [‘Loan Stock’] agreement offered in this Confidential
Offering Memorandum [‘the Offering’]. There may be restrictions on the sale of the Loan
Stock and it must be deemed speculative in nature [refer to ‘Benefits and Risks’]. The
Offering contemplated is not, and under no circumstances is it to be construed as, a public
offering of the Loan Stock described herein. As such, persons who subscribe to this Loan
Stock pursuant to this Offering will not have the benefit of any review of the within materials
by any securities commission or similar regulatory body within the jurisdiction in which they
may be acquired. Acceptance by an investor of the Loan Stock in no way passes upon the
merits or the validity of this Offering or of the investments proposed and/or made by Metals
Investment Trust Limited or any of its affiliated companies.
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This document is a private placement memorandum and is not a public offering or any other form
of public solicitation for funds.
$6,048,000
METALS INVESTMENT TRUST LIMITED:
10% SECURED CONVERTIBLE LOAN STOCK
Maturing 15th February 2005
Metals Investment Trust Limited [‘MITL’] is a company duly incorporated under the laws of
England and Wales on the 26th day of October 1998. Meyado International Ltd [‘Meyado’]
in its own name and as nominee shareholder on behalf of its clients owns a majority stake
with more than 75% of the voting rights of MITL’s shares. MITL is the sole controlling
shareholder of Meretec Corporation; a company duly incorporated under the laws of the State
of Delaware, USA on the 9th day of May 2000 [‘Meretec’]. Meretec is the global brand name
for a process, which transforms galvanized steel scrap into premium-grade steel melting stock
and ready-to-use high quality zinc dust [‘the Meretec process’]. MITL through its wholly
owned subsidiary Meretec, has the potential to become one of the world’s largest producers of
zinc and the global market leader in the recycling of galvanised steel.
The proceeds of this Offering, by which investors or subscribers will receive Loan Stock in
MITL, will be directed primarily at the completion of Meretec’s plant. It is estimated that
with all best efforts, construction will be completed within an estimated time frame of 12
weeks from the closing of this Offering. A further 14 weeks will be required as a run-up
period in order to bring the plant fully online. Investors in this Offering are required to
subscribe a minimum in MITL’s Loan Stock of US$50,000 or multiples of US$ 25,000 [i.e.
$50,000, $75,000, $100,000, etc.].
This Offering represents an offer in MITL’s Loan Stock paying an annual interest rate of 10%
per annum. The Loan Stock is secured on the property, plant and patents of MITL. The Loan
Stock may be converted to shares in MITL at a price of $ 18.50 on 15th February 2005. It is
envisaged by MITL that the required and realized total subscriptions received from investors
to this Offering will amount to a targeted US$6,048,000.
This value of the property, plant and patents as well as the price per MITL’s share has been
based on an independent valuation of MITL’s current plant and projected profit by a major
international consulting firm specializing in this field.
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MITL’s registered office is located c/o Meyado International Limited, 2nd Floor, Berkeley
Square House, Berkeley Square, London W1X 6EA, United Kingdom; Tel: +44 (0) 20 7887
6045; Fax: +44 (0) 20 7887 6540; e-mail address www.meyado.com.
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Summary of the Terms of the Convertible Loan Stock
Denomination: US Dollars.
5
Paying Agents: HSBC
Guernsey, Channel Islands
Account Name: Metals Investment Trust Limited
Account Number :
Sort Code 40-22-25
Swift Code: MIDLJESH
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d) If MITL enters into any arrangement or
composition with its creditors.
Early Conversion: At any time after 16th February 2002, MITL can
redeem the Loan Stock provided that it gives
Loan Stock holders 45 days notice through the
Investment Advisor of its intention to redeem. In
the event of a change of control and MITL shares
are sold to a third party or floated on the stock
market, then investors will be offered the chance
to convert into shares at a price of $18.50 prior to
maturity.
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or such other address as shall be designated by
any party hereto to the other parties hereto in a
written notice delivered in accordance with the
terms hereof.
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BACKGROUND TO THE INVESTMENT OPPORTUNITY
MITL removes the zinc coating from scrap galvanized steel before recycling, recovering
premium-grade melt stock and high quality zinc dust as resources to sell with profit, whilst
adding value to customers by preventing pollution and its associated costs.
THE DEMAND
Environmental considerations are now firmly and permanently on the boardroom agenda;
corporations are facing the prospect of unlimited legal liability, increasing material and
production costs, negative publicity and consumer rejection.
Reducing the environmental impact of a company’s output has become a strategic corporate
goal. The solution is eco-efficiency; the combination of environmental considerations with the
practical reality of business economics. The key components of eco-efficiency are pollution
prevention (P2) and resource recovery (R2).
THE NICHE
With its Meretec process, MITL is a world leader in P2R2 technology and the market leader in
its niche. That niche is the multi-billion USD a year market of recycling galvanised steel.
Steel is the most recycled material on earth, a process realised by melting scrap within the
steel making and metal casting industries. But when melting galvanised steel, the zinc coating
vaporises to become a costly contaminant, pollutant and chemical waste, with operational,
metallurgical, and environmental consequences. The current costs and production penalties,
plus the potential future legal liabilities, resulting from the collection, treatment, disposal and
reuse of this waste are neither economically nor environmentally intelligent, when its
production can be significantly reduced or eliminated altogether.
The patented Meretec process removes the zinc coating before the recycling process,
preventing the pollution that would otherwise be generated, and recovering the resources that
would otherwise be lost.
The Meretec process removes the zinc coating via a chemical reaction with sodium hydroxide
in solution, leaving the steel in a virtually identical chemical state to when it was first
produced. The Meretec process then recovers the zinc via electrowinning, a form of
electrolysis, to produce zinc dust of 99.98% purity.
The Meretec process is itself eco-efficient, with all processing chemicals being internally
recycled, and only oxygen and hydrogen combined as water vapour, released into the
atmosphere.
The resulting residual-free steel is a premium-grade melt stock, the in-feed of choice for much
of the metal casting industry. The high quality zinc dust is an altogether unique product, with
highly specialised industrial and manufacturing applications, and realises a premium over the
LME price.
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ADDED VALUE
For each tonne of galvanised steel processed, MITL generates approximately 60 USD of
tangible added-value. MITL’s profitability is only limited by the volume of galvanised steel
that it can process.
OPERATIONS
Currently focusing on the US market, MITL is positioning itself to process the 2 million
tonnes of scrap galvanised steel produced annually as stamping plant off-cuts by the US
automotive industry. Additional growth will come from processing the galvanised steel from
end-life automotive vehicles.
THE OPPORTUNITY.
In addition to the contribution Loan Stock holders will make by participating in this Offering,
they will be well positioned to take financial advantage of the benefits, which will likely
accrue if MITL goes for its Initial Public Offering, which is anticipated within the next 18
months or is sold to a third party investor (Read Risk Factors).
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THE OFFER
1. PRIVATE PLACEMENT
Such persons are institutional investors and other professional investors such as banks,
insurance companies, industrial companies, pension funds, investment management
companies or financial services institutions, who, due to their professional expertise,
do not depend on receiving information about the offered securities in the form of a
sales prospectus.
(i) These persons are individually known to the offeror prior to the offer;
(ii) If they are addressed by him on the basis of a selected choice according to
individual aspects;
(iii) If they require no additional information by means of a prospectus.
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THE PARTIES
a) METALS INVESTMENT TRUST LIMITED
METALS INVESTMENT TRUST LIMITED was duly incorporated under the laws of
England and Wales on the 26th day of October 1998.
Board of Directors
The directors and officers of METALS INVESTMENT TRUST LIMITED are:
Director of MITL, Meyado International Ltd and Sensor Marketing AB. Mr. Skoog
has a Bachelor degree from Stockholm University and has spent most of his
professional life in international businesses. He has been with Lux (Household
appliances) as Marketing Executive in the Philippines, South Korea and Malaysia,
with Electrolux-Euroclean (Commercial cleaning equipment) as General Manager in
Germany, and with Intrum Justitia (Finance) as Managing Director in the Czech
Republic. He has also served as a director of Meyado International for six years. Mr.
Skoog was appointed as Managing Director of MITL in January 2000.
Mr. Martin E. Young was born in the United Kingdom in 1962. Mr. Young founded
Meyado International Limited (MIL) in 1991. MIL has grown over the last 10 years to
be one of the largest financial advisory companies in the world offering Private
Banking Services to high net worth private clients. Mr. Young started working as a
Fund manager in 1995 on behalf of MIL clients. He has run three funds for 5 years
and now specializes in Fund management, Mergers and Acquisitions and raising
venture capital for private clients.
Share Capital
The authorized share capital of METALS INVESTMENT TRUST LIMITED is
£1,875,079.96 divided into 59,983,363 shares of 3.126 pence each and 2 shares of
2.000 pence each/.
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Auditors
Nykiel, Carlin, Glotzbach & Co
7135 Indianapolis Blvd,
Hammond,
Indiana, 46324,
USA.
Tel: +1 219 8443900
b) MERETEC CORPORATION
MERETEC CORPORATION was duly incorporated under the laws of Delaware,
United States on the 9th day of May 1999.
.
Board of Directors
The director (s) and officer of MERETEC CORPORATION are:
Principal Consultant for Frederick J. Dudek & Co. servicing the chemical and physical
processing industries. Mr. Dudek has a Bachelor and Master of Science degrees in
Physics from Northern Illinois University and Illinois Institute of Technology. He
began his industrial career as a Product & Process Development Scientist with
American Zinc Corporation and then St. Joe Minerals Corporation. He has held R&D
management positions at Allied-Signal's Corporate Research Center and two
manufacturing divisions. He has also served as Principal Investigator at Argonne
National Laboratory on projects to develop economic processes for recycling of
industrial scrap.
Share Capital
The authorized share capital of MERETEC CORPORATION is $1,000 divided into
1,000 shares of $1 each.
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Auditors
Nykiel, Carlin, Glotzbach & Co
7135 Indianapolis Blvd,
Hammond,
Indiana, 46324,
USA.
Tel: =+1 219 844390
Board of Directors
The director (s) and officer of MEYADO INTERNATIONAL LIMITED are:
Auditors
Gallagher’s
33A High Street,
Stony Stratford,
Bucks,
England
Lawyers:
Heuking Kuhn & Partners,
Linden Str 31,
60325 Frankfurt,
Germany
Share Capital
The authorized share capital of MEYADO INTERNATIONAL LIMITED is £20,000
divided into 20,000 shares of £1 each. Meyado International Limited is wholly owned
by MEYADO GROUP HOLDINGS LIMITED.
Board of Directors
The director (s) and officer of MEYADO GROUP HOLDINGS LIMITED are:
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Name and residence Principal position
Martin Young Managing Director
Flat 1, 5 Mount St,
Mayfair,
London W1X 5EA
England
Share Capital
The authorized share capital of MEYADO GROUP HOLDINGS LIMITED is
$1,000,000 divided into 20,000,000 shares of 5 cents each.
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INVESTMENT POLICY AND OBJECTIVES
SUBSCRIPTION PROCEDURE
After execution by the investor of the subscription form and delivery of payment in the form
of a bankers draft, certified cheque or telegraphic transfer, an investor is entitled to withdraw
from the agreement to purchase MITL’s Loan Stock if, within 5 days following receipt of
funds, written notice is given to Meyado that the investor has chosen not to be bound by the
agreement and wishes to be reimbursed his or her subscription amount. In such case the full
subscription amount, less any bank charges, will be released from the company’s bank
account within 10 days of receipt of such notice, said reimbursed amount not being subject to
the payment of any interest or any administrative charges.
In the event that investors do not avail themselves of the foregoing ‘cooling-off’ period, then
such subscriptions are irrevocable and non-refundable. Meyado will hold the subscription
amount pending confirmation to subscribers that their subscription has been received,
following which within 10 days, a receipt will be sent to the address given by the subscriber
for correspondence stating that the requisite investment has been transferred to a nominee
account bearing the subscriber’s name.
At any and all times and notwithstanding the foregoing, subscribers may assign their Loan
Stock to a third party, upon written notice being given to Meyado. The appropriate changes
to the company Loan Stock register will be implemented by Meyado to facilitate such transfer
from the Loan Stock holder to any third party.
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RISK FACTORS
Risks that all investors need to be aware of before purchasing Loan Stock:
MITL proposes to operate a plant using a chemical process to treat scrap-galvanised steel and
produce clean black scrap and zinc powder of a very high level of purity. Revenues will be
derived from the sale of these products.
1.1 We Have Only Been in Business for a Short Period of Time; Your Basis for Evaluating Us
Is Limited
We were incorporated in October 1998. The existing plant in East Chicago has not yet
reached full operating capacity. Accordingly, we have only a limited operating history for
you to evaluate our business. You must consider the risks, expenses and uncertainties that an
early stage company like ours faces. In order to address these risks successfully, we must:
- Develop the quality of the zinc powder we produce to the target level of 99.9%
purity;
- Attract customers;
There can be no assurance that the Company will be able to successfully address such risks,
and the failure to do so could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
We will need to generate significant revenues to achieve profitability. We may not achieve
profitability. If we do not generate revenues or if our revenues grow more slowly than we
anticipate or if our operating expenses increase more than we expect our business, prospects,
financial condition and results of operations will be materially and adversely affected.
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1.3 No Current Source of Revenue
We expect to derive our revenues from the sale of clean black scrap steel and zinc powder.
However to date, we have not yet signed any supply contracts with prospective purchasers for
our product. We cannot guarantee that we will be able to obtain sales in sufficient amounts to
make us profitable, or at all.
- The LME zinc price, on which our zinc powder sales will be based;
Future revenues are difficult to forecast. If we have a shortfall in revenues in relation to our
expenses, then our business, prospects, results of operations and financial condition would be
materially and adversely affected.
- Market conditions;
- Investor sentiment.
These factors may make the timing, amount, terms and conditions of the intended flotation
unattractive for us. If we are unable to arrange a successful IPO our prospects for further
expansion would be materially and adversely affected; and the ability of investors to sell their
shares would be jeopardized.
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Enforcement of our rights against those who may infringe them may be time consuming and
expensive. There may be patents issued or pending that are held by others and that cover
processes intended to achieve by other means the same results as our process achieves. The
successful development of such processes could have a material adverse effect on our
business, prospects, financial condition and results of operations.
3.2 Shares are held by Meyado as Nominee Shareholder on behalf of existing and future
investors.
Meyado as Nominee Shareholder owns a controlling 75% interest in MITL and will have
significant influence in determining the outcome of any corporate transaction or other matter
submitted to the shareholders for approval, including mergers, consolidations and the sale of
all or substantially all of our assets, and also the power to prevent or cause a change in
control. The interests of Meyado may differ from the interests of the other shareholders.
Among other things, Meyado could use such control to add provisions to our Memorandum
and Articles that could have the effect of delaying or preventing a change of control or
changes in our management that a shareholder might consider favourable. Meyado is a
relatively small private limited company, substantially controlled by a single major
shareholder, and to the extent that Meyado might be subject to financial difficulties MITL
could be adversely affected.
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- Failure to exploit any market opportunity that exists for our products;
- Technology standards;
Any of these factors could adversely affect our business, prospects, financial condition and
results of operations. Our ability to operate successfully depends on many factors. These
factors include:
In the event of default and subsequent liquidation, the full value of MITL’s assets, namely the
property, plant, machinery and patents may not be obtained. Consequently, investors may not
have the full amount of their original investment returned. Further, there is no guarantee that
an immediate sale of the assets can, or will, take place.
THE END
This fact sheet does not form part of any prospectus; it is intended for professional advisers only and if you are not a
professional advisor you should read it in conjunction with the Key Features document or Prospectus. Applications should only
be considered on the basis of the full prospectus for the offering concerned. An investment in the offering entails risks, which
are described in the prospectus. However you should be aware that the value of Loan Stock, as well as the income you receive
from them, can fall as well as rise and consequently you may not get back the amount originally invested. Past performance is
not necessarily a guide to the future. Investing in Private Equity / Venture Capital caries a high level of risk as it may take some
time before the proceeds of the investment can be realised. It may be impossible to exit the investment at a price that the
Investment Advisor considers to be fair. Our charges may have to rise in the future, which could reduce the value of the
investment. Changes in exchange rates between currencies may cause the value of your investment to diminish or increase.
Performance of your investment may be affected by uncertainties in government policies, taxation, currency repatriation
restrictions and other developments in the law and regulations of the countries it invests in. All or most of the protections
provided by the UK regulatory system do not apply under this investment, compensation under the UK’s investor Compensation
scheme will not be available and UK cancellation rules do not apply. This fund does not attempt to track the performance index
illustrated; it is merely shown as an indication of the performance of the market(s) in which the service invests. The service is
available only in jurisdictions where its promotion and the sale are permitted. Nothing in this fact sheet should be construed as
advice. The service is not offered for sale in the US, its territories or possessions, nor in any jurisdiction in which the service is
not authorised to be publicly sold. This fact sheet had been issued by Meyado and does not promote the products of any other
companies.
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