Float to capitalise on tyre system invention

Press, 19 February 1986, Page 37

Float to capitalise on tyre system invention

A prospectus has been registered for a special partnership for an invention which was the runner-up in the 1985 TVNZ-UDC Inventor of the Year awards.

Genesis Promotions, Ltd, and Company, is seeking between $910,000 and SI.3M to market and sell rights to the tyre tamer for almost seven years.

The tyre tamer is a dual-tyre pressure system developed for dualwheeled trucks and trailers to reduce wear. The engineering device ensures that the air pressures in dual tyres are equal, regardless of heat build-up, road camber, inexact tyre manufacture and unequal load distribution.

In the prospectus, the partnership’s promoter says that, although the dual-wheel concept (bolting two wheels together) enables a truck to carry heavier loads, it also poses problems.

These include: • Minute differences in diameter between the two tyres cause substantially increased wear in the smaller tyre because of scuffing and drag. • The larger tyre carries more of the load, causing greater heat build-up and Increased diameter, which relates in turn to the first point.

• Heavy disc brakes fitted to the hub closest to the inner tyre cause heat build-up, sometimes up to 200 deg. C.

The promotion company is Motus Marketing, Ltd, of Auckland, a wholly owned subsidiary of Motus International, Ltd. Business Loans and Equity Capital, Ltd (BLE) of New South Wales (a subsidiary of the Westpac Banking Corporation and investors in Industry, PLC, a British company owned by major British banks) holds 15 per cent of the capital in Motus, through BLE Capital (N.Z.), Ltd.

The chairman of Genesis Promotions, Mr Wayne Wright, says it has taken five years to research and develop the tyre tamer. The promoters have spent $400,000. Patent rights to make the tyre tamer have been taken out in New Zealand, and formal approval Is pending in the United States, the United Kingdom, Australia, and Europe.

In spite of being hampered by the lack of funds, marketing efforts so far have indicated a significant potential for the invention.

Exports of the units between January 16 and November 30 last year was 2773, including 1380 to the United States and 1296 to the United Kingdom.

The units have been exported for product testing overseas by trucking fleets and prospective distribution agencies, Mr Wright says. “The positive feedback from these test forms the basis for the belief that, not only has the tyre

tamer sound commercial prospects, but the risks involved with further promotion have been minimised.”

The promoter says that a device to equalise pressures between two tyres in a dual-tyre arrangement is not new, but the tyre tamer has overcome previous design difficulties and failures.

The tyre tamer consists of a stem-mounted, aluminium alloy cut-off valve and pressure indicator. It has a single spring-pro-tected nylon hose connecting the device to the inner tyre.

The cut-off valve runs by a pressure-sensitive piston working from either tyre. If the pressure is within the preset pressure range a common air chamber, comprising both tyres, is formed, allowing free pressure and heat exchange. If the pressure in either tyre drops below the preset range the valve closes and isolates the tyres. The cost to the partnership of expanding the international markets will be up to $2.14M, which will be paid as a lump sum contract price to Motus, the promoter says. Because of the large sum involved, and to reduce the expense to partners, Motus has arranged a loan equal to SNZIM from an overseas financier, Asia and Pacific Finance, Ltd, at the present Singapore interbank offer rate (SIBOR), plus 3 per cent. For the financial projections a 12 per cent rate has been assumed.

Motus will make tyre tamers for the partnership at $6O a unit and also take 20 per cent of the gross sales price as sales commission to Motus Marketing. It is unlikely that significant sales will be made in the period to March 31. The issue consists of a maximum of 1290 $lOOO units, $lOO payable on application and $9OO on March 7. The minimum subscription is five units ($5000). The issue opens on Friday and closes on March 7, unless subscribed earlier.

Mr Wright says that tax legislation enables subscribers to the issue to claim a deduction for the cost of their investment against other income. Funds raised, along with the supporting loan, will enable investors to claim nearly twice their investment against other income.

Over the term of the partnership, to March 31, 1992, each partner’s share of pre-tax profits is expected to generate more than four times (30 per cent a year) the original investment, he says.