BiON to establish biogas consortium
19 November 2020
("BiON" or "the Company")
BiON to establish consortium to accelerate expansion of biogas activities in Malaysia
BiON (AIM: BION), an environmental engineering, wastewater treatment and renewable energy solutions company, announces that it has today signed a number of non-binding Memorandums of Understanding ("MOUs") with three parties, with complementary expertise and resources in the biogas industry in Malaysia, to work together to advance their joint interests. The parties will now seek to enter formal partnerships, which would enable a significant strengthening and expansion of the Company's biogas and broader waste-to-energy activities.
The Company, through its wholly-owned subsidiaries BiON Ventures Sdn Bhd ("BVSB") and BiON Sdn Bhd, has signed MOUs with each of the following:
· Green Lagoon Technology Sdn Bhd ("GLT"), a developer of biogas power plants for customers and those that are wholly-owned, with a specialisation in in-ground bioreactor systems. GLT currently has four grid-connected biogas power plants generating a total of 6MW.
· LIPP Engineering Sdn Bhd ("LIPP"), an engineering, procurement and construction company focused on generating renewable energy from various biomass or waste sources utilising its German-developed technology. In addition, through a subsidiary company, LIPP has strong manufacturing capabilities enabling it to produce advanced equipment and machinery.
· SIRIM Tech Venture Sdn Bhd ("SIRIM"), a government organisation established to promote technological advancement and adoption to drive industrial efficiency and development in Malaysia.
Under the terms of the Company's agreement with GLT, the parties will seek to formalise a partnership that is expected to involve the establishment of a special purpose vehicle ("SPV") (which would be 55% owned by BiON with a majority board control) that would own and operate the entire biogas assets of both companies, valued for the purposes of the transaction at RM53.9 million for BVSB and RM61.1 million for GLT ("Assigned Values"). BVSB shall be responsible for raising the funding to meet the requirements of the SPV and GLT shall be responsible for managing all biogas power plant projects, including current pipeline and future biogas power plant projects.
The Directors believe that the new entity would be the largest owner of biogas power plants in Malaysia based on installed capacity, which would enjoy benefits such as from economies of scale and the pooling of expertise.
It is intended that BVSB and GLT shall enter into a definitive share subscription agreement, shareholders' agreement and other relevant agreements, which will be subject to the following:
(i) verification of the Assigned Value by an independent party to be appointed by GLT and BVSB;
(ii) satisfactory legal due diligence on GLT and BVSB;
(iii) satisfactory technical due diligence on GLT and BVSB; and
(iv) in principle approval from the relevant authorities on the transaction structure.
In addition, as this transaction would be considered a Fundamental Change of business under the AIM Rules, any such transaction would require the approval of the Company's shareholders via the convening of a general meeting. The Company will update the market as appropriate in due course.
GLT's audited accounts for the year ended 31 December 2019 reported a profit before taxation of RM1.3 million on turnover of RM47.0 million with gross assets as at that date of RM42.0 million.
BiON will, in addition, work with each of LIPP and SIRIM, respectively, to explore potential waste-to-energy opportunities, including biogas, that would be of mutual benefit and which can leverage the resources of both parties. In particular, under the agreement with LIPP, the parties will seek to work together - with LIPP as a technology and/or development partner - to enhance BiON's current biogas business as well as seeking future opportunities across various biomass fields. The Company's partnership with SIRIM includes, amongst other objectives, the joint establishment of a bioenergy hub for the commercialisation of agricultural and industrial waste.
As noted above, each of the MOUs are non-binding and subject to definitive documentation.
Datuk Syed Nazim bin Syed Faisal, CEO of BiON, said: "We are delighted to have entered these three MOUs that we believe will accelerate the expansion of our activities. Each member of this consortium - with BiON at the centre - brings different, but complementary, resources and expertise, which, together, provide critical mass to enable us to drive forward not only our own business but the development of the biogas and broader waste-to-energy industry in Malaysia. As we have said previously, a key element of our growth strategy is to form strategic partnerships and joint ventures and this is the important first step in the delivery of that plan. We look forward to working with our new partners and reporting on our progress."
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the EU Market Abuse Regulation (596/2014).
Datuk Syed Nazim bin Syed Faisal, CEO +603 6413 1085
Fakrizzaki Ghazali, CFO
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish, Felicity Geidt +44 20 7628 3396
Optiva Securities Limited (Broker)
Vishal Balasingham +44 20 3137 1903
Luther Pendragon (Financial PR Adviser)
Claire Norbury +44 20 7618 9100