Trading Emissions Plc is seeking to renegotiate unprofitable carbon contracts and there are “encouraging” initial signs that Chinese sellers are taking a “pragmatic approach to the problem.”
The company has an unhedged exposure of 11 million metric tons of Certified Emission Reduction credits, Trading Emissions said today in a statement distributed by the Regulatory News Service. They would be worth 39.7 million euros ($53.1 million) at yesterday’s closing price of December credits of 3.61 euros a ton on the ICE Futures Europe exchange in London.
The carbon assets have a “negative valuation” of 18 million pounds ($29 million), the company said, citing a report from a firm of accountants that it didn’t identify in the statement.
Shares in the company have plunged 74 percent in the past year as the price of credits dropped because of oversupply in the European Union carbon market. The shares hadn’t traded today in London.
The company has cash of 62 million pounds and other assets of 140 million pounds, according to the statement.
The credit plunge was caused by “persistent depressed demand” and the company is seeking to do everything that’s “lawfully available to it” to minimize its exposure, it said. “Initial reception from many sellers has been positive, provided that, as part of the negotiations, the company agrees to purchase post-2012 CERs at an agreed discount to the market price at the time of delivery.”
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