Aequus Agarwood Update January 2018


In brief:

– The Funds need to be formally closed down without further delays

– Assets remain

– Options will be sent to all investors 

– Arrangements for the processing and sale of assets were delayed but are now close to finalising

I will confess to having had to do a double-take at the date on my last update… 29th August is further back than I thought that previous update had been.


The intervening months have been mostly spent with an almost 100% focus away from agarwood and the problems we are working to solve, to the point where the website was down and I hadn’t noticed. Needs must. The lack of capital starving efforts needed to be addressed and I have been lucky enough to find a regular retainer that has allowed me to both rebuild an element of personal finances whilst salting away funds for the agarwood via Aequus. 


The deal heralded in the August update got knocked back for a few days, then a few weeks and on it continued to spill. The reasons are now apparent. The group in question fractured. Half the group was prepared to take on the deal proposed but here we are in January and they are still not ready. This is understandable but doesn’t help us. Throughout November and December, when I could, I reopened previous conversations and met with new potentials. The potential for those contacts, as a participant in our exit strategy remains very much in play but time marches on and I promised an end to this.


Everything I said in that August missive remains 100% unchanged in terms of where we’re at and what we need. The expansion of the Aequus network on the sales side – whether in abeyance or current – cannot be a bad thing, whichever way we proceed now.


If I were now to say that I think I’ve found the best solution and that I have a meeting on 16th to thrash out final points and move to a sign-off… well, we’ve been here before haven’t we? 


Hence I am saying nothing… 


What I will say is that by the end of this week I will be writing to you all mapping out your options. The funds will be formally closed down and the asset run-out thus needs to go down one of two or three routes and I will be asking for your stated preferences as to which route suits you better on an investor by investor basis.


By way of managing expectations: Realistically I think we are looking at a 2-year dead-stop to allow oil and proceeds of processing to be sold and I think the deal will require Aequus to fund the processing. The company is now in a position where this is possible, subject to caveats. It has been hard work getting to a point where Aequus will have the necessary funding. 


I believe that I will be able to present a willing buyer as part of this package but at the fire sale prices we have sought to avoid and against which I will still counsel. Aequus is in a position regarding a suitable series of partnerships wherein the key component of any deal is not the other party’s processing abilities (although a Singapore Group with which I’m in negotiations have existing distilleries outside Thailand and intentions to start distilling in Thailand), rather it is the vertical integration of any suitors and providing a proof of capability to actually sell the Aequus produce. 


Until recently, nobody has shown me any such proof to any reasonable level. Many have proclaimed such capabilities though, and that’s the market we’re in.


If a partner can genuinely demonstrate a “value add” in return for allowing them either time to market and sell the produce or the option to “blend” or otherwise enhance the oil to improve pricing and marketability then that has to be the preferred route here in any sensible universe. I am also also looking into the ability (by which I mean I think I have a provider but cannot take enquiries further without final, finite detail) to insure the run-out of the assets via a performance bond to give those who hang in for better pricing an absolute worst-case scenario. Since I personally hold investments in the oil, such a solution is of interest to me personally as well as from a management perspective. In essence, I have the same decisions to make as anyone reading this. I mention this in passing, it is by no means certain that such an insurance plug-in can be negotiated at an affordable price and certainly such arrangements will have to post-date immediate arrangements and thus post-date the letter that I will send out at the back end of this week setting out your options. 


The next update will be published to coincide with the letters.