ASX query response announcements are typically most read when companies get a speeding ticket, but a reply to a more technical query from hydrogen tanker company Provaris (ASX:PV1) on Thursday made for exciting reading.
Exciting, that is, if you’re the kind of person who finds courtroom drama compelling.
On Wednesday, the ASX effectively accused Provaris of issuing a trading halt when it didn’t need to in order to drum up excitement around a non-legally-binding agreement between itself and engineering giant Uniper that, in the ASX’s view, might not go anywhere and thus deliver no shareholder value (or loss.)
But contained within Provaris’s response to ASX Compliance are buried some interesting counterpoints.
Provaris has told the ASX it considers any non-binding memorandum of understanding (MOU) to be material to a company’s share price, at least with European partners, because an MOU captures the spirit of an agreement regardless of whether it’s binding or not.
For those who are lost: non-binding MOUs are often treated with cynicism by veteran traders and shareholders who may have been burned before on ambitious and far-reaching agreements from sometimes smaller companies. An MOU with no real legal ‘lock-ins’ can, should an operator decide to act wrongly, be used to put lipstick on a pig (for lack of a better phrase.)
The general thrust of the ASX’s please explain to Provaris, between the lines, accused the company of whacking a trading halt on a non-price-sensitive announcement to drum up excitement for what was ultimately a pedestrian update – with the unspoken allegation being that Provaris is trying to pump its share price.
But Provaris CEO Martin Carolan – whose signature ends Provaris’s response and not legal counsel, despite the document being quite lawerly – sees it differently.
“The MOU being non-exclusive was not a material consideration for the Company,” Carolan wrote.
“At this reasonably early stage of the rapidly expanding hydrogen sector globally (and, in particular, in Europe) major participants understandingly are assessing all options and it would be unusual for them to agree to full exclusivity.
“Major European utilities are generally reluctant to have their name included in any announcements. The fact that Uniper was prepared for the Company and [a Provaris subsidiary] to include reference to Uniper in the announcement is a further indication of their commitment to the scope of the cooperation under the MOU.”
So what’s going on here?
Earlier this week, the company announced it had struck an early-stage explorative agreement with Europe-based engineering giant Uniper to assess how Provaris could go about getting hydrogen from the Netherlands via its yet-to-be-built hydrogen tanker ship to Germany.
The ship in question is really the whole deal behind the announcement, even more than the hydrogen – Provaris is ultimately attempting to build one of the world’s first full-scale oceanic hydrogen tankers, which it calls the H2Neo.
Unfortunately, it finds itself one of the last true ASX-listed hydrogen fighters in a thematic ecosystem where hydrogen as an alternative fuel source has well and truly fallen off, at least compared to the enthusiasm it aroused in 2021. There’s also the issue Provaris’s Dutch partner went bankrupt in June this year.
All in all, the deal (non-binding) struck between Uniper and Provaris ultimately intends to give the latter a professional assessment of the relevant supply chain capabilities, or absences thereof, in the still nascent European hydrogen market – a fact acknowledged by Carolan in his response to ASX compliance on Thursday.
Whether that is truly price sensitive or not is, unfortunately, a philosophical question – but rarely do you see companies’ correspondence to ASX compliance adopt the combative tone of that from Provaris on Thursday.
I won’t name names, but this financial journalist, at least, is aware of multiple company CEOs who view the Perth-based compliance listings office at the bourse of being pedantic.
“They’re just jerks,” one anonymous chief executive once told me. I make no assessment on the validity of that claim, but it’s a sentiment I’ve heard put more eloquently from others (but why not just get to the point, to be fair to my anonymous source.)
Fun fact: A conceptually similar vessel to the H2Neo currently exists called the Susio Frontier which was exporting Australian hydrogen created from brown coal offshore; perhaps for angering the spirit of renewables, it once caught fire at a port in Victoria.
PV1 shares last traded at 1.9cps.