19 December 2016
DETAILS
BioAmber Inc. (NYSE: BIOA)
has signed a non-binding letter of intent with
South Korean-based
CJ CheilJedang Corporation (KRX:097950) ("CJCJ").
Under the terms of the agreement,
BioAmber and CJCJ plan to establish
a joint venture in China
to produce up to 36,000 metric tons
of bio-succinic acid annually
and commercialize the output in Asia.
The goal is to competitively produce
bio-succinic acid in China and quickly penetrate
the world's largest succinic acid market.
This can be achieved rapidly, cost effectively
and with limited capital investment
by retrofitting an existing CJCJ fermentation facility
with BioAmber's succinic acid technology.
CJCJ would incur all capital costs required
to retrofit their fermentation facility, including
the capital needed during plant commissioning and startup,
and production would begin in Q1 2018.
If market demand were to subsequently
exceed production capacity, the joint venture
could expand production through
debottlenecking and/or additional investment.
The partners would also have
a mutual right-of-first-refusal to retrofit
additional CJCJ fermentation facilities globally.
CJCJ would own 65% of the JV and
BioAmber would own 35%.
The JV would pay BioAmber a technology royalty
for having access to
BioAmber's proven bio-succinic acid technology,
and would pay CJCJ
a tolling fee for producing bio-succinic acid
on behalf of the JV.
Both partners would be entitled
to a share of the profits equal to
their respective equity ownership positions.
The proposed joint venture is subject to
certain conditions, including
technical and commercial due diligence,
with the definitive agreements
expected to be signed by July 2017.
As part of the letter of intent, BioAmber
will be selling CJCJ bio-succinic acid manufactured
at its Sarnia, Ontario plant, so that
CJCJ can undertake market development
in China and South Korea in the first half of 2017.
WWW.CHEMWINFO.COM BY KHUN PHICHAI
