TIDMAXS
RNS Number : 9972E
Accsys Technologies PLC
02 November 2022
AIM: AXS
Euronext Amsterdam: AXS
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
2 November 2022
Accsys Technologies PLC
("Accsys", the "Group" or the "Company")
Update on Tricoya - Consortium restructure
Accsys, the fast-growing and eco-friendly company that combines
chemistry and technology to create high performance, sustainable
wood building products, provides an update on the options for the
world's first Tricoya plant in Hull, UK (the "Tricoya Hull
Project") and an update on construction of the Tricoya Hull
plant.
On 12 September 2022 the Company announced ongoing discussions
with the consortium partners regarding the Tricoya Hull Project and
funding options given rising plant costs following construction
delays including the impact of COVID-19 and the continuing
volatility in energy and acetyls prices impacting on the plant's
short-term profitability.
Today the Company is pleased to announce the resolution of these
discussions resulting in Accsys agreeing to acquire 100% ownership
of the Tricoya group entities, being Tricoya Technologies Limited
("TTL") and Tricoya UK Limited ("TUK") (together with TTL the
"Tricoya Entities"), along with the refinancing and reduction of
debt associated with TUK.
Key points:
-- Agreement has now been reached between the consortium being
Accsys, INEOS Acetyls Investments Limited ("INEOS"), Medite, BGF
and Volantis (together the "Consortium Partners") for Accsys to
gain 100% ownership of the Tricoya Entities including the
construction project at Hull and the Tricoya intellectual property
and associated technology licences:
o The Consortium Partners will transfer their Tricoya Entity
shares to Accsys in return for 11.9m new Accsys shares (the "Share
Issuance"), which represents 5.74% of Accsys' current issued share
capital.
o INEOS and Medite will retain their existing supply and offtake
agreements respectively to the Tricoya Hull Project as committed
commercial partners.
o NatWest has agreed to restructure its TUK debt facility,
lowering the principal amount by approximately EUR9m to total
EUR6m, under a new 7-year term.
o The agreement gives Accsys the option to take the Tricoya Hull
Project forward on its own terms and to benefit from 100% of the
long-term returns from Tricoya(R) wood including any future
licencing in respect of the global Tricoya market opportunity.
-- Updated Hull construction project outlook:
o Accsys will stop current site activity for at least six months
(the " Hold Period ") , to mitigate the risk of weaker economics on
start-up due to current high and volatile acetyls raw material
prices in Europe.
o Third party reports have been concluded confirming up to
around EUR35m for the remaining project capital costs to bring the
plant into commercial operation, with further reviews ongoing. This
would bring the expected total capital costs for the project to up
to around EUR138m vs the previously announced maximum of EUR103m
reported in June 2022.
o Final total project costs will remain subject to the timeline
that the project is completed over and exclude up to EUR0.5m
monthly costs anticipated during the Hold Period.
o At normalised acetyls prices the Company expects that gross
margins for the Hull plant of up to 40% continue to be achievable
once operating at target capacity.
-- In the immediate term, Accsys will focus on increasing
Accoya(R) production at the Arnhem facility and resulting cash
generation, which will also support future financing options for
the Tricoya Hull Project.
-- Accsys' Board is pleased to reach this solvent solution with
the Consortium Partners and create optionality over completing the
Hull plant.
Commenting on the restructure, Rob Harris, CEO of Accsys
said:
"Accsys is pleased to take over 100% of the Tricoya project.
This provides us certainty over the project, gives us full control
and the ability to complete the construction on our terms, at the
right time. Whilst that time is not right now, the validation work
undertaken has demonstrated that the opportunity to produce
Tricoya(R) at attractive margins in the future remains strong. We
are also pleased to move ahead with the continued support of INEOS
and Medite as supply and offtake partners.
As we look ahead, with full ownership of the Tricoya Entities,
Accsys can now benefit from the full upside of the Hull plant and
from any future facilities or licences created globally where
Accsys continues to see a compelling global market opportunity for
Tricoya(R) . The Tricoya project remains synergistic with the
Accoya (R) market proposition which is building positive momentum
following the successful commissioning of the fourth reactor in
Arnhem and with the advancing construction of our facility in the
USA. "
Tricoya consortium restructure
Accsys has reached agreement to acquire full ownership of TUK
and TTL, from its Consortium Partners. The consideration for this
will be satisfied by the issue of 11.9 million new ordinary Accsys
shares to the other Tricoya Consortium Partners (the " Restructure
"). The Share Issuance represents 5.74% of the current issued share
capital of Accsys and based on the Accsys share price at close of
trading on 1 November 2022 it represents a value of EUR9.8m (based
on the Euronext closing price) or GBP8.4m (based on the London
Stock Exchange closing price).
Under the agreement Accsys will acquire the remaining 38.2%
holding in TUK that TTL does not already own and the 23.5% holding
in TTL that it does not already own. The Restructure is expected to
complete on or around 7 November 2022 once 11.6 million shares to
be issued through the Share Issuance are admitted to trading on the
London Stock Exchange's AIM and Euronext Amsterdam markets, with a
further 0.3 million shares to be admitted in the days
following.
INEOS and Medite's respective supply and offtake agreements for
the Hull plant will continue on their current terms.
NatWest has agreed to restructure its TUK debt facility,
reducing the principal amount by approximately EUR9m to total
EUR6m, under a new 7-year term. The NatWest facility remains
ringfenced from the Accsys Group, the Accoya (R) plant at Arnhem
and other joint ventures. No repayments are due until the facility
maturity date.
Further details are set out in the Notes below.
Benefits of the Restructure
Accsys' Board believes the Restructure is in the best interests
of Accsys shareholders and provides greater certainty and full
control of the Hull plant and Tricoya overall, with benefits to
Accsys including:
-- Control and optionality over the completion of the Hull
plant, including the timing, cost, and basis of funding for the
Tricoya Hull Project plant.
-- Discretion over future development of the Tricoya proposition including licencing.
-- No commitment to invest further capital now and time to
assess options in regard to funding any future capital
requirements.
-- Simplifies the Group's structure and will streamline internal governance.
-- Avoids a more uncertain insolvency risk for the Tricoya
Entities due to the lack of agreement of further funding into the
Hull Tricoya Project under the consortium structure.
Tricoya Hull Project outlook
Accsys intends to freeze current plant activity on construction
and commissioning for an anticipated period of at least six months.
This will significantly reduce the FY23 cash impact from Hull on a
monthly cost run rate basis from approximately EUR4m earlier in CY
2022 to around EUR0.5m going forward. During the Hold Period the
Accsys Board will continue to assess the further work needed to
finalise construction and commissioning of the Tricoya Hull Project
and the forecasting of the remaining costs. The length of the Hold
Period will be determined by the Board based on measurable
parameters and will not be for an indefinite period.
Two separate specialist firms were engaged to validate the
capital costs for the remaining construction and commissioning work
required to bring the Tricoya Hull Project into operation. Noting
that the plant is the first of its kind, the specialists suggest
that the additional capital cost to complete and commission the
plant is expected to be up to around EUR35m. This would take total
project capital cost to up to around EUR138m, from the previously
announced expected maximum of EUR 103m on 30 June 2022.
The monthly costs of the plant during the Hold Period will be up
to approximately EUR0.5m (on an average basis) for the ongoing
security, maintenance and care of the site. The length of the Hold
Period, and the speed over which the completion works are
delivered, will impact the total cost of the plant to bring it into
commercial operation.
The Hold Period will have the strategic benefit of delaying and
preventing the Hull plant from coming into operation during
volatile and historically high gas and acetic anhydride prices:
-- The Tricoya (R) production process requires proportionately
more acetic anhydride per unit value of wood chip produced than the
Accoya (R) production process.
-- While Accsys' acetylation process continues to benefit from a
partial natural hedge through the sale of acetic acid by-product,
commencing the operation of the Hull plant during historically high
and volatile prices for acetic anhydride would further lower the
initial profitability of the plant during its early phases of
ramp-up.
-- Therefore, delaying start-up of the Hull plant may improve
the profitability of the operational ramp up period and reduce
funding requirements for the project.
At the end of the Hold Period, Accsys will only commit capital
to complete the Hull plant if it is satisfied that Accsys can
expect to receive an appropriate return on further investment.
Factors that the Board will evaluate in this regard include:
-- Greater clarity on costs to complete and commission the facility;
-- Acetyls pricing, volatility and achievable margins;
-- Project delivery capability, organisation and structure in
place to give certainty, visibility and assurance of the project
completion; and
-- Full exploration of funding options by Accsys, including
consideration of trade and financial co-investors, debt, new equity
and contributions from Accsys' cash resources.
Accsys' financial position
The Group remains adequately capitalised and the Restructuring
will not impact the cash resources of the Group given that it is
being conducted by way of the Share Issuance.
As at 30 September 2022, Accsys Group held adjusted net debt of
approximately EUR62m (31 March 2022: EUR55m). The Group's net debt
figure is expected to decrease by around EUR9.5m as a result of the
Restructure given the reduction of the NatWest facility from
approximately EUR15m to EUR6m.
Following the successful completion of the fourth Accoya (R)
reactor expansion project, production and resulting sales volumes
are now increasing. As a result, and with reduced site activity at
the Tricoya Hull Project as set out above, the Group expects a good
increase in cash generation progressively over the remainder of the
financial year.
The Tricoya Entities are currently loss making given that the
plant is not yet operational (FY 2022 operating loss of EUR4.1m).
The Tricoya Entities are currently fully consolidated into Group
figures, therefore there will be limited impact of the
Restructuring on the presentation of the Accsys Group's financial
statements.
However, given the additional capital costs identified to
complete the Tricoya Hull Project, and the uncertainty over the
investment and completion timing, Accsys will likely record a
material exceptional non-cash impairment of a proportion of the
tangible fixed assets associated with the Hull plant in its
upcoming half year results. As at 31 March 2022 (FY22), Accsys
reported plant and machinery assets under construction at Hull with
a net book value of EUR93.6m on a fully consolidated basis.
Accsys will publish its financial results for H1 of the 2023
financial year on 22 November 2022, covering the six months to 30
September 2022.
Notes:
Tricoya entities
In relation to the development, manufacture and sale of
acetylated wood chips for the use in MDF ("Tricoya (R) "), Accsys
has been part of a consortium principally with INEOS Acetyls
Investments Ltd ("INEOS") and MEDITE Europe DAC ("Medite") as key
commercial partners. The Tricoya consortium has been funded
historically through a mixture of equity from the consortium
members and debt from NatWest Bank PLC ("Natwest") and Accsys.
There are two elements to the consortium:
-- Tricoya Technologies Limited ("TTL") - the company owning and
licencing Tricoya (R) related intellectual property. The
shareholders of TTL are: Medite, INEOS, Accsys, BGF (an investment
firm) and Volantis (an investment fund managed by Lombard Odier
investment firm).
-- Tricoya UK Limited ("TUK") - the company established to
build, own and operate the world's first Tricoya (R) plant in Hull,
UK. The shareholders of TUK are: Medite, INEOS and TTL.
Accsys share issuance
-- Under the Restructuring, Consortium Partners will each
receive Accsys shares in return for transferring their full
shareholdings in TTL and TUK to Accsys. A pplication will be made
today in respect of the Share Issuance for 11,608,259 ordinary
shares, which will rank pari passu in all respects with the
existing ordinary shares of the Company, to be admitted to the
regulated market operated by Euronext Amsterdam N.V. ("Euronext
Amsterdam") and to the London Stock Exchange's AIM market, which is
expected to occur on or around 8.00 am UK time on 7 November 2022
("Admission"). A separate application for the remaining 267,542
ordinary shares is expected to be made shortly following
Admission.
-- Upon Admission, the total number of issued shares and the
total number of voting rights in the Company will be 218,504,968.
This figure should be used by shareholders in the Company as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in, the share capital of the Company under the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules.
-- The Accsys shares to be issued to consortium parties are
subject to lock up restrictions on the disposal of these shares,
for up to 9 months following completion (with partial release of
tranches during the lock-up period), subject to customary
exceptions and orderly market provisions during the 9 month
period.
-- Under the Restructuring INEOS and Medite will receive
7,500,000 and 3,500,000 Accsys shares respectively.
-- INEOS and Medite are related parties to Accsys under the AIM
Rules for Companies. The arrangements with INEOS and Medite as part
of the Restructure are related party transactions under the AIM
Rules for Companies. The Directors consider, having consulted with
Numis as Nominated Advisor, that the terms of the arrangements with
INEOS and Medite as part of the Restructure are fair and reasonable
insofar as shareholders of the Company are concerned.
Tricoya restructure
-- The amended NatWest loan of EUR6m will accrue interest which
will be rolled up until the Hull plant is operational. The floating
interest rate remains in line with the previous loan terms. The
loan has no financial covenants.
-- Separate to, and in addition to the amended EUR6m loan,
NatWest will be entitled to obtain recovery of up to approximately
EUR9.5m, on a contingent basis, depending on profitability of the
Tricoya Hull plant once operational. The contingent payments to
NatWest are based upon free cash-flow generated by the Hull
plant.
-- Accsys' recent bridging loan to TUK of EUR8m issued in August
2022 will now be committed and rank joint first with the NatWest
Senior Loan. Accsys' second ranked loan facility to TUK of EUR17m
issued in 2021 will remain and rank behind the other two loans.
Ends
This Announcement contains inside information for the purposes
of EU MAR and UK MAR (together, "MAR"). The person responsible for
making this announcement is Nick Hartigan, General Counsel and
Company Secretary, Accsys Technologies PLC.
For further information, please contact:
Accsys Technologies PLC +44 20 7421 4322
Investor Relations ir@accsysplc.com
Numis Securities (London)
Oliver Hardy (NOMAD), Ben Stoop +44 (0) 20 7260 1000
Investec Bank plc (London)
Carlton Nelson, Alex Wright +44 (0) 20 7597 5970
ABN Amro (Amsterdam)
Richard van Etten, Dennis van Helmond +31 20 344 2000
FTI Consulting (UK) +44 (0) 20 3727 1340
Matthew O'Keeffe, Alex Le May, Cally Accsys@fticonsulting.com
Billimore
Off the Grid (The Netherlands)
Frank Neervoort, Yvonne Derske +31 681 734 236
Notes to editors:
Accsys (Accsys Technologies PLC) is a fast-growing business with
a purpose: changing wood to change the world. The company combines
chemistry, technology and ingenuity to make Accoya(R) wood and
Tricoya(R) wood elements: high performance wood products that are
extremely durable and stable, opening new opportunities for the
built environment and giving the world a choice to build
sustainably. Accsys transforms fast-growing, certified sustainable
wood into building materials with an up to 50-year warranty,
locking carbon stored in the wood into useful products for decades,
with performance characteristics that match or better those of
non-renewable, resource-depleting and polluting alternatives.
Accsys is listed on the London Stock Exchange AIM market and on
Euronext Amsterdam, under the symbols 'AXS'. Visit
www.accsysplc.com
Accoya(R) solid wood is sustainable, durable, and stable with
exceptional performance, finish and sustainability. Accsys'
proprietary acetylation process makes the wood more dimensionally
stable and because it is no longer easily digestible, extremely
durable. It is one of very few building materials to be Cradle to
Cradle Certified(TM) at the Gold level, with a Platinum rating for
Material Health, confirming that no harmful or toxic additives or
chemicals are present to leach out into the environment. Primary
applications for Accoya(R) wood include windows, doors, cladding
and decking, where the combination of performance and
sustainability benefits compete favorably against hardwoods,
plastics, metals and concrete. Visit www.accoya.com
Tricoya(R) acetylated wood elements are produced for use in the
fabrication of panel products such as medium density fibreboard
(MDF). Panel products made with Tricoya(R) wood elements are truly
durable and stable enough for use outdoors and in wet environments,
unlocking new possibilities for design and construction. They have
been lauded as the first major innovation in the wood composites
industry in more than 30 years and bring the flexibility of
traditional panel products and sustainability benefits of wood to a
whole new range of applications. Visit www.tricoya.com
Any references in this announcement to agreements with Accsys
shall mean agreements with either Accsys or its subsidiary entities
unless otherwise specified. 'Accsys' and 'Accsys Technologies' are
trading names of Titan Wood Limited ("TWL"), a wholly-owned
subsidiary of Accsys Technologies PLC. Accoya(R) , Tricoya(R) and
the Trimarque Device are registered trademarks owned by TWL, and
may not be used or reproduced without written permission from TWL,
or in the case of the Tricoya(R) registered brand trademark, from
Tricoya Technologies Limited, a subsidiary of TWL with exclusive
rights to exploit the Tricoya(R) brand.
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