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Cleantech Building Materials: Cleantech Building Materials and Nantong Acetic Acid Chemical Company Ltd Sign New Joint Venture Investment Agreement to Build the First Accoya® Wood Factory in Asia
31 March 2021
CLEANTECH BUILDING MATERIALS PLC, NASDAQ FIRST NORTH GROWTH MARKET, COPENHAGEN
TICKER: CBM
ISIN: GBOOBVIVRR47
CLEANTECH BUILDING MATERIALS PLC
CLEANTECH BUILDING MATERIALS AND NANTONG ACETIC ACID CHEMICAL COMPANY LTD SIGN NEW JOINT VENTURE INVESTMENT AGREEMENT TO BUILD THE FIRST ACCOYA® WOOD FACTORY IN ASIA
Cleantech Building Materials PLC (“CBM” or the “Company”) is pleased to announce the signing of a comprehensive Joint Venture agreement to build the first Accoya® Wood factory in China (the “Agreement”). Under the terms of the Agreement, a new joint venture company (the “Joint Venture Company”) will be immediately formed between CBM’s subsidiary, Diamond Wood China Limited (“Diamond Wood”) and Nantong Acetic Acid Chemical Company Ltd (“NTAAC”), an international Chinese chemical group, to construct an Accoya® Wood factory with an initial design capacity of 160,000 m3 and ultimate target annual capacity of 480,000 m3. The initial financing is for circa €48,000,000 as set out below.
Under the terms of the Agreement, Diamond Wood and NTAAC have agreed specific factory-related milestones and equity contributions by each party. Diamond Wood will contribute €11.2m of equity for a 51% majority shareholding of the Joint Venture Company with the additional right to receive a royalty income up to €180,000,000. This equity contribution will be made utilising the Company’s investment agreement with a private family office which was announced in July 2019. NTAAC will contribute €10.8m of equity for a 49% shareholding. Debt financing has been agreed with a leading Chinese bank for the remaining €26m. The China-based Accoya® Wood factory is expected to be producing its first Accoya® Wood at the end of 2022, with sales volume ramping up in 2023.
Diamond Wood has the exclusive license to produce and market up to 750,000 m3 annually of Accoya® Wood in the Greater China Region from Accsys Technologies plc (“Accsys”), with a right to sell into other Asian markets. Accoya® Wood supply is currently only available from Accsys’ Titan Wood factory in Arnhem, Netherlands, and is primarily sold as a premium building material to small construction projects. The new Diamond Wood-NTAAC Joint Venture plans to industrialise the production of Accoya® Wood on a large scale. By leveraging significantly lower costs in chemical, wood, energy and other key inputs, the planned China Joint Venture Company will supply Accoya® Wood to high-volume wood-product manufacturers in China and Asia, which dominate global markets in windows, doors, flooring and outdoor furniture.
With 2019 revenues of over RMB 2.3 billion, NTAAC is amongst China’s top 100 specialty chemical companies and a National High-Tech Enterprise with approximately 800 employees, located in Nantong city, within the greater Shanghai region. NTAAC specialises in acetyls derivatives and currently has an annual capacity of 168,000 tons of specialty chemicals. NTAAC is a leading supplier of sorbic acid to major global food and beverage companies. One derivative product of acetic acid, acetic anhydride, is the key chemical used in producing Accoya® Wood.
Commenting, Qing Jiu, Chairman of NTAAC Group, said: “This Joint Venture Agreement fully shows that NTAAC is entering the field of materials science industry. With the increasing demand for environmental-friendliness and wood performance for building materials in China and the Asia market, the establishment of an Accoya® Wood production base in Nantong, China is timely, indispensable, and suitable. Chinese government officials, the environment bureau and the local bank are strong supporters of the Accoya® Wood factory in Nantong. NTAAC and Diamond Wood have the intention to build up the factory capacity quickly, with the objective of creating a global production base for competitively-priced Accoya® Wood.”
Commenting, Paul Richards, Chairman of Cleantech Building Materials, said: “This new Joint Venture Agreement brings together a strong team to commercialise Accoya® Wood on a scale previously unimagined. CBM is now in a position to implement its corporate expansion.”
Commenting, Greg Lee, Chairman of Diamond Wood China, said: “Global demand for Accoya® Wood has outstripped supply for several years, driving the price of Accoya® Wood to an all-time high. Asian wood-product manufacturers value Accoya® Wood’s performance and environmental credentials, but the high price and limited supply have kept them on the side lines. The new China-based Accoya® Wood factory is a game changer, enabling Accoya® Wood to move out of its niche status to become a truly mass-market product.”
THE DIRECTORS OF CLEANTECH BUILDING MATERIALS PLC ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
Further information may be found at the Company's website at www.cbm-plc.com
For further information, please contact:
Cleantech Building Materials plc | info@cbm-plc.com |
Keswick Global AG (Certified Adviser) | info@keswickglobal.com |
IFC Advisory Limited (Financial PR) | +44 20 3934 6630 |
The information communicated in this announcement is “inside information” for the purposes of article 7 of the Market Abuse Regulation 596/2014.