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No longer a single revenue source after acquisitions. Reliable financials, investor friendly and well diversified around the world.
It may have bottomed waiting for a lift from market and semiconductor sector. It has been tracking several similar techs. An upcoming turn around from APPL and China can lift this too.
Silly to think they wouldnt find new distributors after all these years in business. No wonder analysts priced in the bad news giving a new PT way higher than this ridiculous price. Technicals keep turning positive. Options at $5 and $10 ahead.
CCAA preserves and maximizes value for all stakeholders
It is the objective of the SISP proceedings under CCAA overseeing by the court.
Having approved the DIP loan kept the business in conditions to be sold at a premium from the multiple competing offers received benefiting all stakeholders, which is what is currently happening. When a trader recently asked Pwc about all the assets being counted in the sales price, they responded that they will try to get maximum value for all assets for stakeholders. Court documents have repeatedly stated these objectives:
“The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant.”
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
“Maintaining operations increases the likelihood of identifying a strategic buyer and as such increases the potential return for all stakeholders.”
“The Petitioners’ outside advisors have estimated that the sale of its assets to a strategic or financial investor will realize approximately twice the value for creditors and other stakeholders as compared to a forced liquidation;”
“We believe that the DIP loan will likely allow the maximization of value for all stakeholders.”
Nextant had stated that several companies from their strategic potential buyers list did approached Bioamber before interested in producing their products in their Sarnia plant. They must be feeling lucky now to have this opportunity to acquire this high capacity fairly new plant they have been salivating all over it for a while. The only problem, they are not the only ones interested.
A few were planning to build plants already. So we know they have big money available. But what if they can get an almost brand new plant at a discount instead of having to pay for its construction?
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
A few others are probably partners that would not only benefit from the business revenues but cutting overhead costs automatically once they buy the business.
Mitsui Chemical
Mitsui Chemical is one of the leading firms in bioplastics and is diversifically present in many bio-based petrochemical alternatives, including bio-succinic acid production. Gaining ownership of BioAmber will further anchor its global presence in the industry.
Jul. 2011: Dow and Mitsui JV to turn sugarcane into bioplastics at world’s largest plant (William Reed Business Media)
Feb. 2016: Mitsui & Co. Invests Additional $CDN25 Million in BioAmber Sarnia (Newswire)
Cargill
"Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
And another group of potential buyers are probably more interested in expanding their intellectual property portfolio and market share of the green bio market that has started to explode in demand.
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
DOW Chemicals
The acquisition of BioAmber could be an entry opportunity in the commercial production of bio-succinic acid with which DowDuPont has the financial and technical expertise for further scalability.
Aug. 2011: Dow Chemical Bets Big on Bioplastics (Motley Fool)
Jul. 2017: Chemical giants see growth in green, clean tech (Reuters)
Who do you think will emerge as the buyer but the one who pays the most.
Canadian holiday over. Deep pockets confirming this morning!
PwcBioamber may confirm to wealthier investors and traders today in the morning, after Canadian holiday yesterday, the multiple competing offers. We may see more volume before market closes today at 1pm.
You need to understand that there are others besides the ihub crowd that are following this stock and don't rely on the information here but rather wait to have an official word from a PR or direct contact before pouring in more into the stock.
I believe many of those participated in the beginning of the strong rally back in June 8th and they wait to be ready for the upcoming phase 2 of the SISP with hard evidence. Others were able to get a hold of leaked information to begin pouring in last Friday before close. Just like June 7th. But others probably had difficulty getting a hold of someone to confirm during the long Canadian holiday weekend.
Surprised didn't retraced lower on low volume yesterday after such a big jump high in the morning. Holding strong!
Recoiling to resume rally. RSI looking good
Offers from BASF Myriant PTT DOW Mitsubishi Chemicals could qualify as part of the multiple competing offers Pwc has received for the buyout. Lets see why...
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
DOW Chemicals
The acquisition of BioAmber could be an entry opportunity in the commercial production of bio-succinic acid with which DowDuPont has the financial and technical expertise for further scalability.
Aug. 2011: Dow Chemical Bets Big on Bioplastics (Motley Fool)
Jul. 2017: Chemical giants see growth in green, clean tech (Reuters)
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
Mitsui Chemical
Mitsui Chemical is one of the leading firms in bioplastics and is diversifically present in many bio-based petrochemical alternatives, including bio-succinic acid production. Gaining ownership of BioAmber will further anchor its global presence in the industry.
Jul. 2011: Dow and Mitsui JV to turn sugarcane into bioplastics at world’s largest plant (William Reed Business Media)
Feb. 2016: Mitsui & Co. Invests Additional $CDN25 Million in BioAmber Sarnia (Newswire)
Cargill
"Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
Who do you think is on the list?
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
We may find out who and the details probably on Monitor's 3rd report later this week or via PR.
Retail broker is offering $2.50 call option 8/17 Schwab posted it a couple of days ago under options available for BIOAQ. You may see it too under your own broker.
August 17, 2018 $2.50 call option available now
ANY Monday's stock price still cheapest of rally considering it is so far away from the possible 700% to 20,000% upside here. Stocks will be scarce but buying at most any price on Monday would still be a bargain for what seems to be ahead with multiple competing offers to buyout the company. A company wanting to snatch this fairly new plant together with all the intellectual property and active customer list for $200 millions is emerging as a possibility now. Yes, it is suddenly in best case scenario for a larger equity residual for shareholders!
Those who calculated $1+ might have been right!
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” document bioamber-009_060718.pdf
Some of the potential buyers were considering building a plant. So they may consider that a new Plant Construction cost is US$141M (2015) and the replacement cost of the Sarnia facility is US$175- 185M. Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets. So we know that they have the CASH!
Some potential buyers were very interested in having a market share on the revenues of green products like the succinct acid market. They will see a top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017. Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Cash and account receivables can increase from recent succinct acid sales and production but having an active customer list it is highly valuable and should also be appraised.
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber. So we know that they also have the CASH ready.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
Trademarks, patents and intellectual property have been assessed at $6mil but they might be even the most valuable to some like BASF. Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Additionally current partners Cargill and Mitsui will highly benefit from an acquisition by reducing their overhead costs automatically and saving their invested energy in the partnership.
As noted by Jerome Hass and Nextant, several of these strategic buyers have been interested in producing in this Sarnia plant for some time. Who will emerge as the buyer from this group of competing offers? Pwc stated objective in this buyout process has been to get maximum value for all assets for stakeholders!
to maximize the price obtained from a buyer is the stated objective now of Pwc in this bid process for the BioAmber buyout. With several companies that have been salivating all over this fairly new plant for some time now, it may not come to a surprise if all those who calculated getting $1 in equity residual from a bid war were right.
"We will not comment on letter received at this point" was the subtle answer I received 3 days ago from someone else in the same Pwc office working on the case when I asked if they had received a LOI yet.
I compared GS1 email official Pwc heading and footing format with the email I received from them and they are the same. Only someone that has been communicating with them would know. Sorry GS1, I had to
More significantly is the sudden volume increase today without official news that reveals that some got insider's information in the afternoon. Same thing happened to begin the first rally back at 3pm on June 7th hours ahead of the motion for the DIP agreement on June 8th.
.38+ likely now due to COMPETING offers received according to Pwc (Thank you GS1)
The heavier volume today also indicated that someone got some information similar to how the first rally started on June 7th hours ahead of the motion agreeing on the DIP to pursue a buyer.
Official PR might be announced after Monday's Canadian holiday
but this stock will explode on Monday trying to gap the possible 700% upside just days ahead from the residual equity from the bidding war buyout. Seems like there is strong interest for this fairly new and the largest succinct acid plant in the world.
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Obviously if there is a bidding war among several interested buyers, the sale price can increase.
So who do you think are the potential buyers that submitted the letters of intent?
To give us a hint of who could the be the most probable, compare Nextant and Pwc lists of potential buyers they researched and look for the ones that coincide on both.
Potential buyers according to Nextant: BASF, DSM, Cargill, Lygos, Genomatica, Myriant, PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, Evolva
Potential buyers according to Pwc: DOW, Reverdia, BASF, Myriant, PTT, Sumitomo, Mitsui, Mitsubishi Chemical, Exxon Mobil, Sinopec Chemical
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
A JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
Read more on document bioamber-009_060718.pdf
Do you know how many offers they got?
How do you know?
Or are assuming from the increased volume that someone got insider's info?
if it closes uptrending, Monday could explode and then Tuesday when market closes early at 1pm
Monday's Canadian holiday but PR by 6pm possible if mgnt is really eager to announce if they got a buyer today. Otherwise it is most probable an announcement would be presented next Tuesday since Monday is a statutory holiday in Canada. Bioamber stated in the last PR that they will keep stakeholders (especially the buyers of their product) updated on the progress.
I am sure they are waiting today to receive notification by 5:30pm from the monitor if they got a buyer because if they didn't they were court mandated to shutdown today but it looks like someone got a hint today of what the announcement will be There is a probability that they ask for an extension of the due date if there were more potential buyers really interested, even if they already got letters from others. The holidays on Monday in Canada and in the US July 4th can interfere further with the time needed by buy potential buyers to meet, discuss and come up with an offer.
I wouldn't expect an announcement by the monitor other than notifying Bioamber and creditors today and posting the outcome on his 3rd report to the court next week sometime between Tuesday and Friday.
insider's information leaked out before next week's announcement probably just like it happened last June 7th hours before the motion for the DIP agreement to pursue a buyout was submitted in court later on June 8th. Some one that heard something in Sarnia or from one of the buyers was heard by a some investors running here to position themselves for the 300%+ upside ahead of Monitor's report or Bioamber PR by July 5th next week after the holidays. Monday many will be chasing the rally, July 3rd market closes early at 1pm!!! By July 5th the stock will be far ahead.
Strong volume uptrending without news = leaked information
Some probably got a hunch that they got a buyer ahead of the announcement next week like it happened last June 7 at closing hours before motion of DIP agreement.
Many will be chasing after the rally soon.
I don't think that a new plant that is the largest in the world to manufacture this product is going to be dismantled for liquidation scraps after the Canadian government invested so much in this Sarnia plant and with such strong demand! Someone will buy this and continue to sell the product to so many expecting buyers in line.
Indications that they will get a strategic buyer to buy them out:
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
It would be interesting to know why Nextant didn't find Mitsui would be a potential buyer and why Pwc didn't include Cargill on the list.
Read more on document bioamber-009_060718.pdf
Fairly new largest plant dismantled for liquidation scraps
Is that what some still think could happen if they don't get a buyer?
Everything is possible for sure and I don't blame those that don't want to buy yet.
Look at all the shares though that don't want to sell either. What are they waiting for?
It will be probable that those watching on the sidelines without an early position will be chasing after the announcement rally next week.
What do you think are the chances that Pwc, the second largest multinational professional services firm in the world with established executive contacts with Bioamber's strategic buyers, won't get a buyer?
If they get even one buyers, what would be the fair price value then?
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
Companies have been salivating over Sarnia for awhile
Both partners and competition have been showing interest for having a plant like this one for quite some time where they can produce their products and share in this lucrative market. No wonder they got so many companies interested in buying them and signing NDAs right after they decided to begin the buyout process. Bioamber have been increasing in revenues year after year with strong demand starting to really increase this year.
Even the government of Canada who invested so much in this Sarnia's bio industrial park, may be helping out to make sure operations continue. Do you really think that this 2.5 plant that is the biggest producer of succinct acid in the world will end up being dismantled for liquidation scraps?
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
Monday's Canadian holiday but PR by 6pm possible if mgnt is really eager to announce if they got a buyer today. Otherwise it is most probable an announcement would be presented next Tuesday since Monday is a statutory holiday in Canada. Bioamber stated in the last PR that they will keep stakeholders (especially the buyers of their product) updated on the progress.
I am sure they are waiting today to receive notification by 5:30pm from the monitor if they got a buyer because if they didn't they were court mandated to shutdown today. There is a probability that they ask for an extension of the due date if there were potential buyers really interested, even if they already got letters from others. The holidays on Monday in Canada and in the US July 4th can interfere further with the time needed by buy potential buyers to meet, discuss and come up with an offer.
I wouldn't expect an announcement by the monitor other than notifying Bioamber and creditors today and posting the outcome on his 3rd report to the court next week sometime between Tuesday and Friday. The stock will probably start moving on heavier volume ahead of that (most likely Tuesday) if someone from Sarnia or the companies interested shares some knowledge out.
Any heavy volume movement downwards today is not related with bad news because market closes before the 5pm deadline but it is because some daytraders or .005 positions think they are holding too long for the possible 300% upside just a few days ahead and are afraid they won't get a buyer for an almost brand new plant that happens to be the largest succinct acid plant in the world with partners and competition salivating all over it even before this convenient opportunity appeared.
Potential buyers may ask to extend due date that was today by 5pm to submit their intent to buy if they need more time to discuss and prepare their offer. Even if monitor gets an offer from another company today, they may extend the date if there are others very interested to maximize the value of all stakeholders.
It is also possible that the stock may experience higher volume and upward movement later today or next week ahead of announcements due to the possibility of heavy investors getting a hold of insider knowledge either from insiders in Bioamber or insiders in the corporations of the different potential buyers that leak info like the rally that began last June 7 just before closing hours ahead they officially filed the motion for the DIP agreement and extension of time.
Yes, everything is possible and there is a chance they may not get an offer but answer this...
Do you think that a fairly new and largest succinct acid plant in the world be dismantled for liquidation scraps after Canadian government has invested so much in that Sarnia industrial complex?
Is the business a total failure or have revenues been rising year after year?
Is the demand for succinct acid weak or strong?
Do they have active customers buying from them steadily?
Do they have partners interested in producing in Sarnia?
Are there other industries interested in the succinct acid market?
Have other companies been seeking to build new plants or expand?
Who will claim the difference from 5 cents to the possible 38 cents per share equity residual from the buyout?
With zero offers by 5pm monitor shutdowns plant as mandated by court. They had to close temporarily before during the court proceedings. They could petition an extension to receive offers if they were in the middle of conversations with potential buyers and due to next Monday's Holiday in Canada and 4th of July in the US, some buyers may want more time to discuss and prepare the details of the offers.
Fairly new 2.5 years old and largest succinct acid plant in the world won't be dismantled for liquidation scraps after the Canadian government invested so much in this Sarnia plant! So what are the indications that there was potential for a buyout even before the proceedings began?
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
Holding well under low volume awaiting next week's news on the buyout bids. A buyer emerging tomorrow but Monitor will probably mention it next week in the third report. Monday is a holiday in Canada.
Yet if you check when the most recent rally happened you will notice something interesting that may play out here tomorrow. The rally was fueled by Bioamber's motion in court to approve the DIP agreement and extend the proceedings a few more days in order for them to find a buyer instead of liquidating. They submitted the motion in court June 8th assuming during working hours in Quebec. Yet the stock exploded at the bell probably due to investors with insider's knowledge. In fact, check 3pm the day before June 7th. Look at the volume. The day they probably crafted the motion.
It wouldn't surprise me if this gets strong volume again tomorrow or next week ahead of the news due to investors that got a hold of insider information that they received an offer or from people from one of the potential companies buying they they sent an offer. Even conversations from the potential companies talking about reserving funds or seeking a loan are signs if you really want to know before the official news. Another sign would be a champagne party on Saturday at the Sarnia plant.
Many waiting in the sidelines with no position like you waiting for announcements to chase after the rally instead of positioning yourself ahead based on DD. I don't blame you though, everyone have their style, specially if they don't do their research. Wouldn't you say that this is holding well with almost zero volume though?
Was at the beach. Said will chase catalysts. Sorry you have been checking on the sidelines like many thus it hasn't been moving but going sideways waiting for the announcement probably next week to see if they got a bidder. Once that happens, some will keep chasing the upward movement catalyst after catalyst instead of positioning ahead of it. Got it?
Indications that they are getting a strategic buyer.
Fairly new 2.5 year old plant which is the largest capacity to make succinct acid in the world won't be dismantle for liquidation scraps.
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 27, 2018
"There is value in the business and the Sarnia plant. I still see Cargill as a logical buyer."
Jerome Hass, portfolio manager at Lightwater Partners on email
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
Answer this:
Is the business a total failure or have revenues been rising year after year?
Is the demand for succinct acid weak or strong?
Do they have active customers buying from them steadily?
Do they have partners interested in producing in Sarnia?
Are there other industries interested in the succinct acid market?
Have other companies been seeking to build new plants or expand?
Who will claim the difference from 5 cents to the possible 38 cents per share equity residual from the buyout?
Do you think that a fairly new and the largest succinct acid plant in the world will be dismantled for liquidation scraps after Canadian government has invested so much in that Sarnia industrial complex? Think about it.
So who could the buyers be?
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. It wouldn't surprise me if the buyers the Monitor now beliefs will bid to buy them are the same that approached them before.
To give us a hint of who could the be the most probable, compare Nextant and Pwc lists of potential buyers they researched and look for the ones that coincide on both.
Potential buyers according to Nextant: BASF, DSM, Cargill, Lygos, Genomatica, Myriant, PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, Evolva
Potential buyers according to Pwc: DOW, Reverdia, BASF, Myriant, PTT, Sumitomo, Mitsui, Mitsubishi Chemical, Exxon Mobil, Sinopec Chemical
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
A JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
.38 residual equity from imminent buyout is conservative
Cheap price chasing upside with each passing catalyst. A buyer is about to emerge tomorrow to be announced next week. Are you positioned ahead of the upcoming news?
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
Long holiday weekend in Canada may not help in knowing based on movement unless you see a happy party with champagne on Saturday. Champagne is a bullish event. A party with beer would be a depressing farewell bearish event imo
There might be some uptrend from inside knowledge too or more people realizing the cheap price with such a 300%+++ upside possibility. Down trend could be due to many things, including people not wanting to wait.
I thought this was dropping to .036 two days ago like Clay said. But it is holding strong with low volume. This stock have trended upwards before with low volume fine. People are not selling and shares are becoming more scarce. That will produce a price increase.
Lets see if BASF want to start a hostile take over tomorrow buying all of our shares for the premium value at 7x
June8 rally began day of motion for DIP
There must have been some investor insider knowledge because this rally began at close on June 7 and exploded at opening on June 8 hours ahead of the submission of the signed court motion for approval of interim financing and extension of the stay of proceedings with the ultimate goal of finding a financial or strategic buyer for the Petitioners’ assets. It wouldn't surprise me if there are more leaks that prompt more upward action ahead of next catalysts like the one on Friday. Besides the buyers that could appear on Friday, could the Canadian Government make a financial offer to save all their investment in Sarnia?
This buyout received a lot of interest in a short time and they accepted very quick deadlines for the SISP. Them also accepting shutting down the moment the Monitor fails to receive any LOI by June 29 at 5pm shows their confidence. Logically a 2.5 year old succinct acid plant which is the highest capacity in the world won't be dismantled for liquidation scraps.
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
It would be interesting to know why Nextant didn't find Mitsui would be a potential buyer and why Pwc didn't include Cargill on the list.
Read more on document bioamber-009_060718.pdf
I agree that if they get more than one bidder, the valuation will increase. When you are calculating the full valuation be aware that the asset numbers the Monitor reports are limited to creditors sake and because other portions are up for negotiation during sale.
Be aware that the Monitor reports asset numbers that pertain to the issue at hand. The Monitor includes more comprehensive numbers that pertain to interested buyers in document bioamber-009_060718.pdf, stating:
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.”
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
3 yr. old Plant $53.8 – $73 averaged at 63.4
Inventory $2.4
Cash $0.4
A/R $1.7
Total Assets: $67.9
Debt: $49
Equity: $18.9
Conservative Value per Share: $0.14
Added buyout deal:
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
Plant at $70+ premium due to more than one bidder
Total Assets: $99.5+
Equity: $50.5
Premium Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.20) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
Don't expect the "Q" off nor Q1 ER
FINRA considers CCAA in Canada restructuring too.
They add the Q to Chapter 11 restructuring cases in the US
and CCAA proceedings are similar with similar consequences even though in Canada they call BIA liquidation proceedings bankruptcy instead of CCAA, FINRA seems to apply the Q to both types restructuring and liquidations. Even if they take it off because is not technically a bankruptcy as in liquidation they may take time and may want to wait to see if this turns into liquidation. We know there is little chance of that but you know how bureaucracy can delay things. Either way we sound desperate when the only major catalyst we seem to be pushing is the "Q".
Bioamber CFO told someone I know here that they won't be producing a Q1 ER. He seemed optimistic on the buyout. Retain brokers keep cycling the expected ER date automatically to the next Monday but that doesn't mean they actually have hard evidence of that. It is just an estimate.
When you create false expectations on the Q and the ER, you hurt the stock trustworthiness on its own. It makes it look bad with each day that your promises go by. Place your energies on the inherent merits.
No one wants to sell nor buy!
Fairly new and the largest succinct acid plant on sale won't be dismantled for liquidation scraps after Canadian government has invested so much in that Sarnia industrial complex. Buyer is about to emerge this Friday! Generated many interested bidders in a short time and monitor beliefs there will be 2 to 3 buyers. Nonbinding Intent due Friday.
Offers due July 31.
Monitor: non-binding LOI are due by June 29th
Obviously new plant won't be dismantled for liquidation scraps
so new buyers will be announced soon.
But who are they? I am suspecting PTTMCC and BASF (see below)
Monitor may report to court on Friday or next week by July 5th
Signals that a buyer is about to place an offer:
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
So, which ones do you think signed the NDAs in interest?
Many on sidelines will miss Friday's move from buyers submitting their intention to buy (LOI)
News can come anytime. Monitor can report to court anytime soon showing how many buyers submitted their letters of intention (LOI).
They are due Friday but he can report as soon as they wrap each phase with enough offers even if they can accept more by the due date. There is an optimism that this buyout will be wrapped up sooner than expected since several companies had approached them interested before and there are several potential and obvious buyers.
New plant won't be dismantled for liquidation scraps
Fairly new 2.5 years old and largest succinct acid plant in the world won't be dismantled for liquidation scraps after the Canadian government invested so much in this Sarnia plant!
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it. The logical buyer will be Cargill who essentially supplies the yeast technology for this business. Cargill spent hundreds of millions of dollars in developing this yeast. They got Cargill to allow them to use this. Cargill essentially can come in and buy the company. There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing. “The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
It turns out that there are exactly 3 matches from both lists. The same amount of buyers the monitor beliefs they will get. The matches are: BASF, Myriant, PTT
BASF
Although currently has the potential to manufacture bio-succinic acid, BASF's production capabilities is relatively small compared to other global players. Acquiring BioAmber could transform BASF into a serious contender in the biobased niche.
Myriant
Myriant is currently in the process of evaluating plan to build plants in key geographies across the globe for the production of bio-succunic acids and other high-value, green specialty chemicals in large established markets
PTT MCC
It is a JV between PTT and Mitsubishi Chemicals, was established to research, develop, manufacture and commercialize bio-based polymers. BioAmber could be vertically integrated within its supply chain.
Mitsubishi Chemicals
Mitsubishi Chemicals is currently pursuing organic and acquisition investments in biobased petrochemical alternatives through internal R&D and joint ventures. The firm has already demonstrated proven interest in bio- succinic acid through its partnership with BioAmber.
April 2011: BioAmber Partners with Mitsubishi Chemical in Succinic Acid
Feb 2018: Mitsubishi Chemical Starts Full scale Sales of New Grade of ‘DURABIO’ Bio-based Engineering Plastic for Bottles
It would be interesting to know why Nextant didn't find Mitsui would be a potential buyer and why Pwc didn't include Cargill on the list.
Read more on document bioamber-009_060718.pdf
Are you positioned for Friday's new rally catalyst?
Evidence that they are getting a buyer this Friday!!!
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it.
The logical buyer will be Cargill who essentially supplies the yeast technology for this business.
Cargill spent hundreds of millions of dollars in developing this yeast.
They got Cargill to allow them to use this. Cargill essentially can come in and buy the company.
There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing
“The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
Answer this:
Do you think that a fairly new and largest succinct acid plant in the world be dismantled for liquidation scraps after Canadian government has invested so much in that Sarnia industrial complex? Think about it.
Is the business a total failure or have revenues been rising year after year?
Is the demand for succinct acid weak or strong?
Do they have active customers buying from them steadily?
Do they have partners interested in producing in Sarnia?
Are there other industries interested in the succinct acid market?
Have other companies been seeking to build new plants or expand?
Who will claim the difference from 5 cents to the possible 38 cents per share equity residual from the buyout?
Cheap price chasing imminent upside with each passing catalyst.
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
So, will you be chasing after the upcoming rallies? Those heavy investors with inside information that started this last June 8 due to the imminent DIP financing application are surely holding.
Who do you think began this rally June8? Obviously it was due to the court filing for DIP loan in order to get the most value from a buyout of the plant in operating conditions. But who do you think invested in this stock in such large volumes to begin the rally?
The court documents were signed June 8 and obviously submitted during the working day. Yet the stock exploded at the opening and even at the closing June 7 there was upward movement already. Smells like insiders, not necessarily from the company, but even investors with inside information? That could mean that this could explode before Friday and ahead of other catalysts.
Won't end up being dismantled for liquidation scraps a fairly new and the highest capacity succinct acid plant in the world. Do not expect earning reports though. CFO said they won't be giving ER for now. He seemed very confident of buyout. Evidence that they are getting a buyer this Friday:
October 2017
“I told management that Bioamber is worth more dead than alive.
Certainly someone will come in and potentially buy it.
The logical buyer will be Cargill who essentially supplies the yeast technology for this business.
Cargill spent hundreds of millions of dollars in developing this yeast.
They got Cargill to allow them to use this. Cargill essentially can come in and buy the company.
There are a bunch of other players in Asia that could be interested.”
Jerome Hass, portfolio manager at Lightwater Partners speaking on BNN Bloomberg Canada
January 2018
Corporate overview expected strong Q4 2017 revenues and claimed established relationships with CJ, PTTMCC (JV between PTT and Mitsubishi Chemicals), Mitsui, Cargill, Arlanxeo.
February 2018
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. According to Nextant, key potential buyers with strategic interest in these products, and hence the Sarnia asset, include: BASF, DSM, Cargill, Lygos, Genomatica, Myriant / PTT, Deinove, Amyris, Invista, CJ, ADM, Corbion, and Evolva.
June 11, 2018
Generated many interested bidders and NDAs in a short time soon after SISP began. Potential buyers according to court monitor Pwc: DOW, Reverdia, BASF, Myriant / PTTMCC (JV between PTT and Mitsubishi Chemicals), Sumitomo, Mitsui, Exxon Mobil, Sinopec Chemical.
June 18, 2018
BioAmber Receives Favourable Court Ruling and Approval for DIP Financing
“The continuing operations of the Sarnia plant are crucial to maximize as much as possible the price that may be obtained from a buyer or an investor interested in the Sarnia plant. BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP. We are optimistic that the closing of a transaction will provide our customers long term supply assurance from the Sarnia facility.”
Study: There is an increase in realised returns to equity at the announcement of DIP loan agreements, which is positive and statistically significant. It is also found that DIP financed firms have a reduced probability of liquidation, and shorter time spent under bankruptcy proceedings.
https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-5957.00398
June 20, 2018
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him via call during latest court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
June 21, 2018
In a communication, CFO, Mario Settino seemed optimistic about the buyout process although he could not share details.
June 29, 2018
Non-binding Intent to bid Letters due.
July 31, 2018
Final bidding offers due.
Answer this: Do you think that a fairly new and largest succinct acid plant in the world be dismantled for liquidation scraps after Canadian government has invested so much in that Sarnia industrial complex? Think about it.
Cheap price will be chasing imminent upside with each catalyst. When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$:
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”
Will you be chasing the rally from Friday's catalyst?
Or are you positioned for Friday’s high buyer probability? Cheap price will be chasing imminent upside.
Appraiser said they have been approached by potential buyers before and court monitor beliefs they will have at least two to three buyers.
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. Court assets reports don't show full buyout valuation. The Monitor understands that more comprehensive numbers will be presented to interested buyers.
“BioA's Company’s assets are comprised of its 30,000 Ton capacity Sarnia production facility, inventory, accounts receivable, trademarks, patents and other intellectual property, tax loss carryforwards (NOL), and other moveable assets.” bioamber-009_060718.pdf
Some assets will be missing from previous reports because they need appraisal or are up for negotiation during sale.
Last February, Nexant estimated the value of the Sarnia plant alone as an operating facility to be within the range of US$53.8 - 73 million (70-95 $Canadian). But for creditors considering the DIP, he limited the assets to relevant numbers just to demonstrate the difference in value with the DIP and without it. The court Monitor used the lowest plant valuation (CAN$70) on the DIP report and doesn’t include intangibles, nor forward revenues or other items that a buyer might consider.
Valuation in US$
After converting into US dollar and using the most recent docs (June13 + Nexant) I get:
Inventory $2.4
Cash $0.4
A/R $1.7
Patents $5+
At least 1yr Forward Revenue $20 from their active order pipeline (some add 2yrs)
3 yr. old Plant at $70+ premium due to more than one bidder
Debt: $49
Equity: $18.9
Total Assets: $99.5+
Equity: $50.5
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.31) because that would limit bidders to agree on a 49% merger instead. Cash and account receivables can increase from recent succinct acid sales and production.
Companies may also give more value to certain things some of which the Monitor presents like:
New Plant Construction cost: US$141M (2015) Replacement cost of facility: US$175- 185M
Top-line growth of US$4.68M representing a 750% YoY increase between from Q4 2016 to 2017
Increased demand for the product has been seen since oil price ramp up from 30$USD/bbl. in January 2016 to 70$USD/bbl. Today. Some say trademarks, patents and intellectual property is more valuable to some.
Bidding War
Obviously if there is a bidding war among several interested buyers, the sale price can increase. Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber. The monitor reported they already have 20 bidders signing NDAs.
“The Monitor, with the help of PwCCF, will continue the ongoing SISP and will work with the Company’s management in preserving enough cash to ensure that the SISP can be concluded. The restructuring plan will help to preserve value for all stakeholders.”