Investors involved with the embattled Irish start-up Bio-Marine Ingredients have been burned as part of a process to save the company from failure.
Those who entered the employment investment incentive scheme (EIIS), and provided equity-based finance to the company that creates human and pet nutrition products, had their full investment written down to zero, documents seen by the showed.
The write-down comes after the firm entered the small company rescue process (Scarp) last October, without the consent of financial services firm Cantor Fitzgerald which led the investment in Bio-Marine Ingredients.
In response, Cantor contacted the Scarp advisor for the case, Declan de Lacey and Rolling Wave Investments, a consortium of Bio-Marine founding investors, to work out a plan that would ensure EIIS investors would retain an equity interest.
However, Rolling Wave decided to end negotiations and partner with an unrelated third party called College Group.
The focus soon shifted to trying to save the company rather than protecting EIIS investors, after a senior loan note was secured.
In a letter, Cantor said it will write to EIIS investors with an “opportunity to participate in further investment” in Bio-Marine Ingredients following the restructuring and business appraisal.
“The last 24 months have been very challenging for the business,” said the letter, seen by the .
It was sent from Cantor chief executive Gerard Casey to the financial advisors of EIIS investors at the start of May, notifying them that they would be contacted about the write-down in the coming days.
Cantor officially contacted the EIIS investors last week.
Cantor did not provide comment to the and Bio-Marine Ingredients did not reply before publication.
EIIS investors received the 40% tax relief in line with Revenue rules; however, some may not be willing to re-engage with Cantor and the company following the recent events.
These types of investments tend to be risky, as they are usually for early-stage businesses. However, a source said the reason they would not re-engage with the company is due to poor communication about the investment and the firm’s future.
