Avantium N.V. (Amsterdam. The Netherlands) announced that it has taken a positive Final Investment Decision (FID) on the construction of its Flagship Plant to produce furandicarboxylic acid (FDCA). The positive FID was taken after the Company fulfilled all three Key Conditions it had defined, which include securing sufficient financing, finalising the engineering and establishing the supply chain, and obtaining sufficient offtake commitments for the Flagship Plant. With the recent signing of a €90 million committed debt financing term sheet, the final outstanding financing condition has now been met.
Reaching this milestone marks a defining moment in the evolution of Avantium and will accelerate the commercialisation of PEF (polyethylene furanoate). Avantium’s FDCA Flagship Plant will be the world’s first factory to produce FDCA (furandicarboxylic acid) on a commercial scale, with a capacity of 5 kiloton per annum. FDCA is the key building block of the 100% plant-based, recyclable plastic material PEF which also has functional advantages compared with fossil fuel derived plastics. Avantium believes that the Flagship Plant, in addition to generating revenues and profits in its own right, will clearly demonstrate the viability of large-scale manufacturing of PEF to consumers, customers and partners. This should pave the way to dramatically expand the applications of PEF, with a potential total end-market of $200 billion per year, which Avantium intends to access by the provision of technology licenses to collaborators worldwide.
The positive Final Investment Decision (FID) concludes an intense phase during which Avantium worked diligently on satisfying the three Key Conditions it had defined as necessary to meet, prior to starting with the construction of its FDCA Flagship Plant: (i) securing sufficient financing; (ii) finalising the engineering and establishing the supply chain; and (iii) obtaining sufficient initial offtake commitments for the Flagship Plant. All three Key Conditions have now been met. To get to this point, Avantium has been actively seeking and building partnerships across the value chain – customers, suppliers, governments and financial partners.
Tom van Aken, Chief Executive Officer of Avantium, comments on the significance of this milestone: “We highly appreciate the trust our partners, and in particular a strong consortium of Dutch banks, place in our innovative technology to produce FDCA and PEF. By meeting the Key Conditions concerning the construction of our FDCA Flagship Plant, we have reached a pivotal point in our journey to commercialise the next-generation plant-based plastic PEF. Bringing a new plastic to the market is a remarkable feat. With the backing of all our stakeholders, our perseverance, efforts and drive are about to bear fruit. We are excited to be playing an important role in accelerating the transition to the circular economy while building value for our shareholders.
Avantium has signed a term sheet for a three-year Debt Financing package of €90 million with a consortium of lenders, comprising the four Dutch banks ABN AMRO Bank, ASN Bank, ING Bank and Rabobank, as well as with the government backed Dutch impact investment fund Invest-NL. Each bank has committed €15 million as a bank loan under the Debt Financing. Invest-NL has committed €30 million debt under the Debt Financing. The €90 million Debt Financing is subject to terms and conditions, including the provision of warrants to the lenders.
The total financing package for the construction of the FDCA flagship plant consists of subsidiesi, third party equityii, Avantium equity and bank loans. Financing is subject to customary terms and conditions, including Financial Close. Avantium agreed to invest an additional €10 million in equity in its subsidiary Avantium Renewable Polymers in order to absorb the additional costs of the delay of one year in reaching Financial Close, bringing the total equity investment by Avantium in its subsidiary to €45 million. Worley and the Groningen Consortium (consisting of Groningen Seaports and regional investment funds NOM, FondsNieuweDoen, Investeringsfonds Groningen and Groeifonds) together will acquire a 22.6% shareholding in Avantium Renewable Polymers, representing a post-money valuation of €132.5 million. Following Financial Close, Avantium will hold 77.4% equity in Avantium Renewable Polymers.
Cas König, CEO of Groningen Seaports, is pleased to collaborate with Avantium to making the FDCA Flagship Plant a reality: “We are excited that Avantium has reached this important milestone for its FDCA Flagship Plant. Avantium’s commercial facility will significantly contribute to the development of sustainable and circular industrial cluster in the Northern region of the Netherlands, that is no longer dependent on fossil resources such as natural gas. This fits perfectly within our Chemport Europe ecosystem where we work together towards a shared ambition: changing the nature of chemistry.” Dina Boonstra, director of regional investment funds NOM (Investment and Development Agency for the Northern Netherlands), Investeringsfonds Groningen and Groeifonds, adds: “The Investment Funds of the Groningen Consortium are excited to support Avantium, enabling Avantium to scale up and commercialise its innovative, breakthrough technology to produce the plant-based plastic material PEF. The production of biobased plastics fits well in the focus and strategy of the Northern Netherlands and we are therefore pleased to welcome Avantium in our region.”
The front-end-engineering and design (FEED) phase was completed in 2021. For the construction phase, Avantium and Worley signed a reimbursable engineering, procurement and construction contract for the FDCA Flagship Plant, conditional to Financial Close, with a contracted delivery date of Q4 2023. Avantium expects the Flagship Plant to be operational in 2024.
Avantium Renewable Polymers entered into a sub-leasehold agreement with Groningen Seaports for land for the construction and operation of its 5 kta FDCA Flagship Plant. On 1 December 2021, the Groningen Environmental Service (ODG – Omgevingsdienst Groningen) published the draft environmental permit for Avantium’s FDCA Flagship Plant.
On the supply chain, Avantium agreed on a multi-year commercial FDCA polymerization contract (conditional to Financial Close) with global specialty polyester supplier Selenis. Avantium has also signed a strategic supply agreement (conditional to Financial Close) with agricultural cooperative Tereos Cooperative group, whereby Avantium Renewable Polymers will purchase high fructose syrup as the feedstock for the FDCA Flagship Plant in Delfzijl. The multi-year agreement secures 100% bio-based and local feedstock for the Flagship Plant. “This strategic partnership combines Tereos’ proven track record in cereal processing and green chemistry with the long-standing expertise of Avantium in the promising field of biobased polymers. It is also a strong sign of our shared commitment to develop renewable solutions made from plant-based technologies and locally produced raw material” comments Christophe Lescroart, CEO of Global Starch & Sweeteners at Tereos.
Avantium has secured five offtake commitments representing over 50% of the total Flagship Plant capacity. Contracts were signed with specialty chemical company Toyobo (Japan), specialty polyester film producer Terphane (US), beverage bottling company Refresco (Netherlands), international rigid packaging supplier Resilux (Belgium), and an undisclosed major global food & beverage brand owner. Avantium continues to pursue negotiations with multiple potential international partners to secure additional offtake commitments.
Avantium seeks shareholders’ support for the positive FID which the Company has taken, enabling Avantium to execute all the relevant documentation, including but not limited to the investment documentation with the minority shareholders of the Groningen Consortium and Worley, and Debt Financing documentation necessary to complete the transaction (“Financial Close”). At Financial Close, all major Project Agreements will consequently become effective. Financial Close is expected in the first quarter of 2022.
Avantium is also seeking shareholders’ approval to raise €45 million in capital. This equity raise is required: (i) to allow the Company to further develop its exciting portfolio of technologies beyond YXY Technology, including for investments in the commercialization of Avantium’s technology programmes, and (ii) for general corporate purposes.