Renergen CEO Stefano Marani is living in Austin, Texas, saying it will be easier to raise funds in the US for the company’s proposed Nasdaq listing.
Renergen holds onshore exploration and production rights for more than 187,000ha of gas and helium fields across Welkom, Virginia and Theunissen in the Free State.
The emerging gas producer was supposed to list on the Nasdaq within the required three months of getting approval from its Australian shareholders in April. The listing has been delayed and the shareholder approval has therefore expired.
Marani’s decision to move was communicated to analysts on his recent trips back to SA, when he was meeting them amid bad press the company has received.
The negative headlines followed revelations by stock analyst Albie Cilliers that a company founder, Ryan Otto, had sold most of his shares — a move that was not declared due to a technicality.
Renergen is facing delays in producing helium, but it has also been taking short-term bridging loans to prevent a cash crunch. It needs to raise R2.6bn from its US listing or private investors as part of the conditions to access $750m (R14bn) in promised cash for further development of its gas and helium reserves.
Business Day asked Marani about his move on Wednesday afternoon and gave him a generous deadline until midday Friday to respond. The firm then decided to issue a media statement and Marani conducted a radio interview on his move.
His choice to live in Austin could be seen as controversial because Renergen is still in the development phase and is yet to produce any helium, despite promises it would be turning out 300kg a day by last month.
Capable team
Marani said there was a team in place which was able to run the firm in his absence.
“Renergen has a capable executive management team responsible for all elements of our business, which requires the team to dovetail to support each other on the key work streams.
“More specifically, Nick Mitchell, our COO and co-founder, has always been more operationally focused. Nick’s primary responsibility is getting the plant fully operational.”
He said a board decision authorised him to travel to the US to see through the initial public offering (IPO) process and the company’s listing on the Nasdaq.
On May 3 when Business Day first asked Marani about his plans to move to the US he said: “[I am] not sure who your source is, but I deny this and state that this is not the case. If it is a requirement that I move, I am open to the idea, but this is not the case now.”
When referring to the move on Friday, he said: “The organisation structure allows me to spend time in SA based on predetermined periods of travel and have regular interaction with Nick and the team, while I am focused on strategic IPO-related initiatives.”
He has said previously that the US market has a much better understanding of the helium business and their companies are better priced.
This week Marani attended a helium conference in the US.
“Given the deep understanding of US investors in the helium and gas sectors and the scale of the proposed raising, we believe this is the ideal place to raise the necessary funding.
“Significant groundwork and relationship building are required for a successful IPO; thus, as a result, it is necessary for in-person discussions to take place in the US.”
BDO, the firm’s auditors, said in the financial statements that if Renergen cannot raise the planned R2.6bn and the committed $750m, it may not be a going concern — in other words it could face bankruptcy.
Renergen’s share price was 2.64% higher at R14.01 in midafternoon trade on the JSE on Friday.
The group, which sells natural gas to two clients reported this week that its losses increased for the half year from R24.5m in August 2022 to R43.5m this year.
Update: November 5 2023
This story has been updated with new information.
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