WAG Limited ACN 008 666 233 to be renamed PacPyro Limited

82 Pages·2011·3.35 MB·English

by  Fairweather & Lemonis

WAG Limited ACN 008 666 233 to be renamed PacPyro Limited

This Prospectus provides important information about the Company. You should read the entire document including the Application Form. If you have
any questions about the Shares being offered under this Prospectus, or any other matter relating to an investment in the Company, you should consult
your professional advisor. An investment in Shares under this Prospectus is highly speculative.
IMPORTANT NOTICE

This Prospectus is dated 6 December 2011 and was lodged with ASIC on that date. Neither ASIC,
ASX nor any of their respective officers take any responsibility for the contents of this Prospectus
or the merits of the investment to which this Prospectus relates.

No securities will be allotted or issued on the basis of this Prospectus later than 13 months after
the date of this Prospectus.

Application will be made to ASX within 7 days after the date of this Prospectus for the quotation of
the Shares the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and
persons who come into possession of this Prospectus should seek advice on and observe any of
these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants
who are resident in countries other than Australia should consult their professional advisers as to
whether any governmental or other consents are required or whether any other formalities need to
be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it
should not be lawful to make such an offer.

No person is authorised to provide any information or make any representation in connection with
the Offer which is not contained in this Prospectus.

WEBSITE – ELECTRONIC PROSPECTUS

A copy of this Prospectus is available and can be downloaded from the website of the Company at
www.wagltd.com.au. Any person accessing the electronic version of this Prospectus for the
purpose of making an investment in the Company must be an Australian resident and must only
access the Prospectus from within Australia. Persons who access the electronic version of this
Prospectus should ensure that they download and read the entire Prospectus.

The Corporations Act prohibits any person passing onto another person an Application Form
unless it is attached to a hard copy of this Prospectus or it accompanies the complete and
unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of
charge by contacting the Company.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have
received the entire Prospectus accompanied by the Application Form. If you have not, please
contact the Company and the Company will send you, for free, either a hard copy or a further
electronic copy of the Prospectus or both.

The Company reserves the right not to accept an Application Form from a person if it has reason to
believe that when that person was given access to the electronic Application Form, it was not
provided together with the electronic Prospectus and any relevant supplementary or replacement
prospectus or any of those documents were incomplete or altered.

DEFINITIONS AND GLOSSARY

Certain terms and abbreviations used in this Prospectus have defined meanings which are
explained in the Glossary.

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A reference to securities in this Prospectus is on a post-consolidation basis (except where noted
otherwise) and therefore assumes that the consolidation of capital proposed at the General
Meeting is effected (see Section 6 for further information about the General Meeting and the
consolidation of capital).

The assets depicted in photographs in this Prospectus are not assets of the Company unless
otherwise stated.

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CORPORATE DIRECTORY

DIRECTORS* INVESTIGATING ACCOUNTANT
Mr Gary Steinepreis Crowe Horwath Perth
Mr Patrick Burke Level 6, 256 St George's Terrace
Mr Matthew Sheldrick Perth WA 6000

SHARE REGISTRY
PROPOSED DIRECTORS*
Computershare Investor Services Pty Limited
Dr Keiran Wulff (Chairman)
Level 2, Reserve Bank Building
Mr John Glen (Chief Executive Officer)
45 St Georges Terrace
Mr Adam Townley (Chief Financial Officer)
Perth WA 6000
Dr Michael Ottaviano (Non-Executive Director)
Tel: [phone]
Mr Peter Mann (Non-Executive Director)

COMPANY SECRETARY*
Mr Gary Steinepreis

REGISTERED AND BUSINESS OFFICE
Level 1, 33 Ord Street
West Perth WA 6005
Tel: [phone]
Fax: [phone]

WEBSITE
www.wagltd.com.au

SOLICITORS TO THE OFFER
Fairweather Corporate Lawyers
595 Stirling Highway
Cottesloe, Western Australia, 6011

* On completion of the PacPyro Transaction the 5 Proposed Directors will be appointed to the
Board and the 3 current Directors will resign. At this time Adam Townley will be appointed
company secretary and Gary Steinepreis will resign.

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CONTENTS

1. INVESTMENT OVERVIEW ..............................................................................................................................6
2. COMPANY AND BUSINESS OVERVIEW ................................................................................................... 16
3. RISK FACTORS ............................................................................................................................................. 43
4. DIRECTORS AND CORPORATE GOVERNANCE ..................................................................................... 47
5. DETAILS OF THE OFFER ............................................................................................................................. 54
6. CONDITIONAL OFFER ................................................................................................................................. 63
7. FINANCIAL INFORMATION ......................................................................................................................... 64
8. INVESTIGATING ACCOUNTANT'S REPORT ............................................................................................ 73
9. ADDITIONAL INFORMATION....................................................................................................................... 76
10. RESPONSIBILITY AND CONSENT OF DIRECTORS AND PROPOSED DIRECTORS ........................ 78
11. GLOSSARY .................................................................................................................................................... 79

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1. INVESTMENT OVERVIEW

Question Response Where to find
more
information
Who is issuing this WAG Limited (ACN 008 666 233) which is to be renamed
Prospectus? "PacPyro Limited" (the "Company").

What will be the The Company is listed on ASX and has entered into the Section 2
Business Model of PacPyro Share Sale Deed by which it will acquire all the
the Company? share capital of PacPyro. PacPyro is developing the slow
pyrolysis technology which converts waste and low value
biomass into renewable energy/electricity and produces a
proprietary biochar called "Agrichar".
The Company will seek to utilise the slow pyrolysis
technology to develop waste management and renewable
energy projects including producing Agrichar.
The Company will look to generate capital growth by
achieving milestones towards the successful deployment of
the slow pyrolysis technology in one or more commercial
scale projects.
In addition, beyond the short term, the Company will seek to
generate income for investors through larger scale roll-out
and commercialisation of the slow pyrolysis technology.
To facilitate commercialisation, PacPyro is developing a
business model which combines:
 targeting revenue streams from deployment of the
slow pyrolysis technology (including licence fees,
royalties, services and by-products, engineering
revenue from project development/delivery/upgrades
and cash flows from project ownership interests); with
 Targeting strategic partnering/relationships with
established large scale waste management
companies who will benefit from the inclusion of the
slow pyrolysis technology in their business models by
improving efficiencies and creating additional value
(such as land fill minimisation, soil amendment, in-situ
power). This opens the potential for the larger scale
roll-out of integrated waste management solutions that
include the slow pyrolysis technology.
The Company will primarily operate in the emerging waste
management, renewable energy, horticulture/agriculture and
carbon markets which brings with it significant opportunities

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Question Response Where to find
more
information
and risks. Some of the key benefits and risks of investing are
set out below.

What are the key Opening Date of the Offer 6 December 2011
dates of the Offer?
General meeting of Shareholders 21 December 2011
Shares suspended from trading on 21 December 2011
ASX
Closing Date of the Offer 21 December 2011
Allotment of Shares under this 11 January 2012
Prospectus
Completion of the PacPyro 11 January 2012
Transaction and the issue of
Shares to the PacPyro Vendors
Reinstatement to trading of Shares 18 January 2012
on ASX
These dates are indicative only and may change without
notice. The Company reserves the right to extend the closing
date and the Offer or close the Offer early without notice.
Applicants are encouraged to apply as soon as possible after
the Offer opens.

What are the The benefits of investing in the Company include the Sections 2 and
benefits of following: 4.1
investing in the
Company?  On completion of the PacPyro Transaction the Company
will acquire 100% of PacPyro. PacPyro is developing the
slow pyrolysis technology which is a waste management
technology converting waste and low value biomass into
renewable energy and producing a proprietary biochar
called "Agrichar".
 The slow pyrolysis technology can produce energy (both
electrical or thermal) through the production of gas
(termed "syngas") from a variety of organic waste streams
including municipal green-waste, sewerage, industrial
sludges, forestry and commercial wood wastes and
agricultural residues that would otherwise be destined for
landfill or low value uses. Energy generated from projects
may qualify for renewable energy certificates offering

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Question Response Where to find
more
information
opportunities for revenue generation and cost offset.
 Research trials over a period of 5 years have
demonstrated that biochar can improve crop performance
through increased yields, reduced fertiliser and water
usage as well as increasing microbial activity and
decreasing emissions from soils.
 PacPyro has an operating demonstration plant at
Somersby, New South Wales.
 PacPyro has accepted an offer of funding support of
$4,500,000 from the Victorian Government in respect of
the SE Victorian Carbon Negative Energy Project.
 The Company will bring together a skilled and
experienced team who have the skills to seek to maximise
the development of the slow pyrolysis technology.

What are the key The key risks of investing in the Company are set out below.
risks of investing in The list of risks is not exhaustive and further details of risk are
the Company? set out in Section 3.
Risk Area Risks
Future capital The Company's ongoing activities will Section 3.2
needs and require substantial expenditure. A
additional funding failure to achieve additional future
funding could prevent the development
of the slow pyrolysis technology. In
particular, significant further cash
funding of approximately $6,000,000 is
required to be obtained by 28 February
2013 in order to continue with the
Victorian Government in respect of the
SE Victorian Carbon Negative Energy
Project.
Commercialisation The Company's research and Section 3.3
of technology/ development of the slow pyrolysis
research and technology may not be successful and
development development milestones may not be
achieved. A failure to successfully
develop and commercialise the slow
pyrolysis technology could lead to loss
of opportunities and severely adversely
impact on the Company.

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Question Response Where to find
more
information
Technology and The Company does not have patent Section 3.4
intellectual protection for the slow pyrolysis
property risk technology. The Company's ability to
compete may be undermined due to a
lack of intellectual property protection.
Regulatory and The development of slow pyrolysis Section 3.5
environmental risk technology and projects for waste
management, renewable energy and
biochar production has a number of
regulatory frameworks surrounding
commercial deployment. If the
Company is unable to obtain regulatory
consents and approvals there may be
an adverse impact on the performance
and operations of the Company.
Dependence on The Company's prospects depend in Section 3.6
key personnel part on the ability of management to
advance the projects of the Company.
Loss of key personnel may have an
adverse impact on the Company's
performance.
SE Victorian PacPyro has accepted an offer of Sections 2.12
Carbon Negative funding support from the Victorian and 3.7
Energy Project risk Government in respect of the SE
Victorian Carbon Negative Energy
Project. A funding agreement is
required to be executed by PacPyro and
the Victorian Government by 29
February 2012 and further cash funding
of approximately $6,000,000 by
PacPyro is required by 28 February
2013. If the funding agreement is not
entered into, PacPyro will not receive
funding from the Victorian Government.
If any funding conditions are not
complied with then the Victorian
Government may withdraw the funding.
Any withdrawal of funding support from
the Victorian Government will have an
adverse impact on the Company's
ability to develop the SE Victorian
Carbon Negative Energy Project.

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Question Response Where to find
more
information
What is the The Company has been listed on the ASX since 6 November Sections 2.16,
financial position of 1989 and discloses financial information to the ASX on a 7 and 8
the Company? periodic reporting basis including lodgement of annual
reports.
The Financial Information at Section 7 contains certain
financial information for the Company and a proforma
balance sheet with various assumptions including the
acquisition of PacPyro.
PacPyro has been developing the slow pyrolysis technology
since July 2009. A summary of the historical financial
information for the PacPyro business is set out in Section
2.15 and the Financial Information at Section 7 further
contains certain financial information for the PacPyro
business.

Who are the On completion of the PacPyro Transaction (being after the Section 4.1
Directors of the Closing Date of the Offer but before reinstatement to trading
Company? of Shares on ASX), the 5 Proposed Directors will be
appointed to the Board and the 3 current Directors will resign.
At this time, the Board will consist of:
 Dr Keiran Wulff (Non-Executive Chairman)
 Mr John Glen (Chief Executive Officer)
 Mr Adam Townley (Chief Financial Officer)
 Dr Michael Ottaviano (Non-Executive Director)
 Mr Peter Mann (Non-Executive Director)

What benefits are The current Directors are paid directors' fees for operating the Section 4.4
or will be paid to Company.
the Directors and
the Proposed Mr John Glen will be engaged under a consultancy services
Directors? agreement in the role as chief executive officer with fees
totalling $125,000 plus GST per annum.
Mr Adam Townley will be engaged under a consultancy
services agreement in the role as chief financial officer and
company secretary with fees totalling $100,000 plus GST per
annum.
Dr Keiran Wulff will be paid a Director's fee of $30,000 per

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