For a company that objects to the characterisation of its plans to leave the ASX in favour of a US listing as being a move offshore, Carbon Revolution sure gives an excellent impression of a outfit that is doing exactly that.
Carbon Revolution is a Geelong-based global leader in the manufacture of carbon-fibre wheels for the performance and prestige car market and a highly regarded poster child for a new generation of innovative, Australian advanced manufacturers.
That was until this week.
Through a share-swap plan announced with US financiers Twin Ridge Capital Acquisition Corp expected to be complete in the first half of 2023, the company will de-list from the ASX, with a new entity to be incorporated in Ireland and traded on a US-based exchange.
Under the arrangements as outlined this week, the company will likely be majority foreign owned although this is a moot point, given that it is domiciled for tax purposes in Ireland with shares traded on a foreign exchange.
And while Carbon Revolution will continue to manufacture wheels in Geelong, it has also confirmed that it plans to set up manufacturing elsewhere. I’m no expert, but that all sounds pretty offshore to me.
Especially given that its new arrangements were announced through a New York agency on a press release datelined “Geelong, Australia and Naples, Florida”. How very modern.
This is most definitely a sad outcome for Australian industry policy, and a terrible return for Australian taxpayers – given the extraordinary support given to Carbon Revolution through a variety of state and federal programs over the past 15 years.
Surely, in a week where legislation was introduced to the Australian Parliament for the creation of the $15 billion National Reconstruction Fund, we can find a way to design a program whereby ongoing support is contingent on recipients committing to Australia.
There should be a mechanism by which a company that has been given large-scale industry support must be forced to re-pay those grants in the event that it shifts its Top Company to a tax haven.
Or in the case of the NRF, equity investments by the fund into these innovative Australian companies must be contingent on these companies remaining in Australia. That seems like a reasonable no-brainer.
Australian taxpayers have every right to feel dudded by Carbon Revolution. Incorporating in Ireland really is a poke in the eye for the Australian community and is the kind of behaviour that undermines public support for generous industry programs.
The federal Industry department should definitely feel dudded. The minister should feel dudded. It’s embarrassing for everyone.
How’s this for classy?
Carbon Revolution announced to the market on Tuesday that it had “now received executed grant documents” from the federal government in relation to its $12 million Modern Manufacturing Initiative grant – announced by the former Coalition government in May just days before the election that brought Anthony Albanese’ Labor to office.
This same announcement unveiled the happy news that Carbon Revolution had successfully convinced government to increase the size of the initial tranche from $4.8 million to $9 million – an increase of $4.2 million – to help the company with cash-flow issues.
Carbon Revolution thanked the Industry department and Australian taxpayers for this support by announcing from New York later that day its detailed plan to move its listing to the United States and to incorporate in Ireland.
Such stunning hubris. No wonder the Carbon Revolution CEO Jake Dingle spent the day answering ‘please explain’ phone calls and providing written assurances to the minister’s office and the department about the future of production in Geelong and the 400-odd jobs at the company’s facility in this important regional manufacturing centre.
The company expects to get its first nine million bucks from government in the next couple of weeks. Incredibly, it also expects to get the remaining $3 million in late 2024, by which time it will be just another US-listed, Ireland-domiciled corporation.
All eyes now will be on where ownership of the intellectual property that was developed in Australia will reside in the complex Carbon Revolution structure that is unfolding. The company says there is “no plan” to move its IP outside of Australia.
Hmm. We will wait and see about this.
Carbon Revolution says it will remain an independent company – whatever that means – with headquarters, manufacturing operations, and R&D based in Australia.
In the meantime, can we please put in place frameworks for government support that allow money to be clawed back where a recipient later chooses to shift domicile to a tax haven? Surely we can agree that this would be a minimum level of protection for Australian taxpayers?
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