Pelamis had debts of £15m following collapse

COLLAPSED wave power developer Pelamis owed more than £15 million, including almost £13m to Scottish Enterprise, when it fell into administration at the end of last year.

Pelamis: 15 million pound debt. Picture: Contributed
Pelamis: 15 million pound debt. Picture: Contributed
Pelamis: 15 million pound debt. Picture: Contributed

With its assets – including intellectual property connected to its “sea-snake” wave energy device – estimated to be worth just £836,000 in total, unsecured creditors of the Edinburgh-based firm are expected to suffer a major shortfall on their debts.

According to a statement of the company’s affairs produced as part of the administration process, Scottish Enterprise’s debt was £8m when the company went into administration but after interest charges and fees the total owed was £12.86m.

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Although Scottish Enterprise held a charge over the company’s assets, the statement estimated the amount it would be entitled to would only be around £660,000.

Unsecured creditors are owed some £3.5m. They include Edinburgh Council, the universities of Dundee and Edinburgh, Orkney Ferries and PR firm Grayling.

Intellectual property, patents and some other assets at Pelamis were bought by Highlands and Islands Enterprise (HIE) last month after reaching a deal with administrators KPMG.

The purchase price has not yet been revealed.

HIE was acting on behalf of Wave Energy Scotland, a new body set up to support the country’s wave-energy sector and fully funded by the Scottish Government.

In their administrators’ report, KPMG said there had been 18 potential buyers who had expressed interest in buying the business.

Although several early offers for all or part of the business were received by an initial closing date in December, by the final closing date only offers for the company’s assets were on the table and HIE was the highest bidder.

All 56 staff at the company were made redundant during the administration which was sparked after the company failed to secure the further investment needed to continue.

In total, more than £90m had been invested in developing the firm’s technology over the past 16 years. In addition to backing from the Scottish Government, the company also attracted some £70m of private investment.

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The Scottish Government has also invested some £15.5m in another Edinburgh-based renewable energy developer, Aquamarine Power, which itself announced job losses shortly after administrators were appointed at Pelamis.

At the time of the two announcements the Scottish Government said it had “reached the full extent of public support possible for these companies, under the EU state aid framework and the rules for prudent public investment.

“Wave Energy Scotland will promote collaboration between industry and academia in order to solve the common challenges facing the sector,” it added.

Last week, Swedish utility Vattenfall said liquidators had been appointed to Aegir Wave Power, its joint venture with Pelamis, which was looking at developing a wave energy project off the Shetland Islands.

Vattenfall said the decision to wind up the business – which didn’t have any employees – came after a six-month review of its ocean energy interests and as it looks to focus investment in wind energy.

But Vattenfall stressed it continued to believe Europe’s wave-energy sector had “long-term strategic potential despite its current challenges” and that its research and development team in Stockholm would maintain a “watching brief” on the sector.