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Are you positioned for this Friday’s high probability of a LOI from big buyer?
Or will you be chasing the rally?
Fairly new highest capacity succinct acid plant in the world on sale!
Will it 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?
Are there other industries interested in the succinct acid market?
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.
Fairly new largest succinct acid plant on sale!
Will it 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?
Are there other industries interested in the succinct acid market?
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.
Are you positioned for this Friday’s high probability of a LOI from big buyer?
Or will you be chasing the rally?
Fairly new largest succinct acid plant on sale!
Will it 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?
Are there other industries interested in the succinct acid market?
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.
Are you positioned for this Friday’s high probability of a LOI from big buyer?
Or will you be chasing the rally?
Evidence that they are getting a buyer.
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?
Many on the sidelines, not many sellers left.
No big 3:30pm typical selloff today.
Q1 ER delayed per last SEC they filed. Court and SEC expect them to keep operations and comply with their ER requirements as they acknowledged. They said there would be a delay back then since they are busy with the proceedings. We expect them to have calculated those numbers by now to be able to answer any potential buyer inquiry.
High revenues expected from stronger demand and cost cutting in partnership with Cargill as supplier to turn almost earning profitable by Q3. Needed a few more months but now are under buyout proceedings. Nevertheless ongoing strong revenues will be a strong selling point for the buyers. Although their intellectual property and list of active customers could be more valuable to some.
They should have the Q1 numbers calculated by now in order to answer potential buyers questions so yes Q1 ER could show up at anytime.
Cheap price. Strong catalysts fast approaching. 300%+ upside possibly within weeks. It would be interesting to find out next week in the 3rd report which are those 2-3 buyers the monitor beliefs they have according to what he said in last court hearing.
Have you calculated the valuation? Here it is. Yes, they are under restructuring court proceedings called CCA in Canada. They don't consider it bankruptcy there unless it moves into BIA liquidation. They are in the middle of the process seeking a buyer with the assistance of the court monitor Pwc. Under a buyout shareholders get equity from a company like this that have more assets than debt. It has been the declared objective of the court monitor and the company to do the buyout in order to benefit all stakeholders.
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: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.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.”
In the middle of a buyout not liquidation. They change the proceedings from seeking a creditors arrangement or liquidation once they realized companies interested in buying them out into a SISP.
"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.” They seem confident in the PR from June 18
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. It doesn't surprise me that they seem confident of getting a few bids. m0n heard the Monitor say to the judge during the June 20th hearing: "we are looking for a buyer” and “we believe there will be 2- 3”
The valuation of the business from a buyout will be enough to cover creditors and have residual equity for shareholders. “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.”
Typical midmorning dip staying in bull range. Unlikely that it will retrace back to .04. There was strong support yesterday at .042. Very likely that it will make a new high passing .056 this afternoon.
Under .043 would go sideways otherwise stays above 50ma bull trending. But some support shown yesterday at .042 as you can see.
.045 was at open, might be gone, keep chasing the 50ma. I think .045 was the lowest possible range in this bull trend at 9:30am, now if it drops within the range might be around .0465. Every hour the range keeps moving up. Next hour will be around .048. That is if it goes all the way down within the range. It may stay more through the middle instead though.
bull trending from .045 on lower range above 50ma for the next following days. You will be chasing the up trend imo.
Cheap price chasing imminent upside each passing day.
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: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.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.”
Remaining in strong bull range with less drop in the first ten minutes than usual. Strong catalysts fast approaching. This cheap price won't last long with such imminent 300% upside. Even a positive surprise Q1 ER could show anytime.
Court monitor beliefs there will be 2-3 buyers according to m0n that heard him during last court hearing tell the judge “we are looking for a buyer” and “we believe there will be 2- 3”
I think someone also said that they mentioned they have a total of 20 interested bidders.
What's significant is that they generated many interested bidders in a short time.
I think that they probably accepted these quick deadlines because they probably knew of companies that were really interested in them.
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
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.
"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.” They seem confident in the PR from June 18
Read more on document bioamber-009_060718.pdf
Merger with BASF would lift this beyond $3 for example since shares would remain intact and they could apply the NOLs and stay ahead. The share value would automatically get boosted. So traders could hold long with option 2 and rise with the merger. That could be even better than just cashing in the equity residual from the buyout.
300% minimum upside possible within days from equity residual from imminent buyout after company's found interested buyers to stay away from liquidation according to what many people have read from recent court reports on this case. You can read the material yourself https://www.pwc.com/ca/bioamber
Summarizing several calculations some have made based on their comprehensive asset value versus debt, shareholders could end up getting from .15 to .40 per share depending on what the interested companies bid for. Although some argue their intellectual property, active customer list and forward revenue outlook warrants a much higher valuation. Of course anything is possible so shares can end up with less although it looks like highly improbable in the opinion of many.
Read all documents, be aware that all assets have been mentioned although not all have been appraised.
“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.”
Additionally some heard the court assigned Monitor telling the judge during the June 20th hearing: "we are looking for a buyer” and “we believe there will be 2- 3”. The monitor reported they already have 18 bidders signed NDAs back in June 13 and 2 more mentioned in court recently. The appraisal company Nextant reported back in February that a few companies investigating potential to produce their products in the Sarnia asset already approached BioAmber.
“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.”
Dig into the documents and make up your own mind. Price is cheap for the moment but it will probably won't last long with strong catalysts fast approaching.
This can remain bull even with low volume historically speaking. This stock have traded under 1million volume just fine and have been able to remain bull trending several times like that. Now, I noticed that over the top rallies that sets alarms on the RSI like the opening last June 19th, tends to provoke overcorrections. So steady does it here.
What matters is the upside fast approaching with a minimum of .15 residual equity for shareholders after creditors are paid and a very feasible over .30 with some even calculating easily over .50 with a bid war. We are at a bargain price right now that won't last long.
Court assets reports don't show full buyout valuation. When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. 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:
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
Minimum 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
Fair Value per Share: $0.38 +
Additional Considerations
Having an active customer list should also be appraised and added in the sales price.
I won’t include the NOL ($.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.”
Next week reports bidders offering LOIs on Friday most probably on Monitor's third report in around July 5th.
They seem to know that at least 2-3 buyers from the 20 interested will present their Letters of Intent (LOIs) which would be enough. m0n heard the monitor say via courtcall there are 20 companies, and he followed it with “we are looking for a buyer” and “we believe there will be 2- 3”.
That's no surprise given that last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them. If they companies they reveal are giants with deep pockets like some are suggesting Cargill and BASF, the expected valuation could double.
They probably accepted these quick SISP deadlines because they probably knew of companies that are really interested in them already so they were able to get this much interest in such a short amount of time.
"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.” They seem confident in the PR from June 18
No typical midmorning dip, so no 3:30 selloff? This has not been a typical day. It typically dips midmorning and starts selling off at 3:30pm. Lets see today. Strong bull trend with low volume and no news. Very cheap price for the upside very close ahead.
no midmorning drop today to break through 50ma on low volume is ending the recoil before resuming the upside chase.
To reach .15+ in a few days this could face some acceleration soon.
Do other traders know what's about to happen here?
Will new traders show up on time?
Would it make sense for the interested bidders to buy this stock too?
Friday Catalyst could have at least 2-3 buyers.
m0n heard the Monitor tell to the judge during the hearing on SISP progress: "we are looking for a buyer” and “we believe there will be 2- 3”
But what is more significant is that they generated many interested bidders in a short time.
They probably accepted these quick deadlines because they probably knew of companies that were already interested in them. Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them.
"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.” They seem confident in the PR from June 18
holding well on low volume down market consolidating for what's to come. strong catalysts are fast approaching and Q1 ER can be a positive surprise anytime now. obvious .10+ upside ahead. Cheap price won't last.
low volume often ahead of breakout too.
I thought it would dip down to .036 earlier
there seems to be support at .04 instead
there were barely news back when the rally began
many on the sidelines will entry closer to catalysts
Q1 ER could be an unexpected positive surprise
they obviously have calculated the numbers by now
to be able to respond to inquiries from interested bidders
Let it gooo, let it gooo upside right ahead.
If a company has more assets than debt, shareholders get the remaining equity after creditors are paid.
2.5 year old high capacity plant, inventory, receivables, revenue forward, trademarks, patents, active list of customers and cost cutting if acquired by partner, which is highly probable.
Plenty of interested bidders gathered in such short time... July 31st fast approaching
blaming shorts vert MM scare traders even more thinking that this is unpredictable despite the good news thus not tradable making them stay away.
Yes, some can be attributable to such pressures but daytraders, profit takers, overall market, and low volume are also factors. If you have done your research, you know what will happen here. The more people discover this upside opportunity that more that the rest won't matter.
CHEAP PRICE recoiling for liftup ahead of buyout.
It may start attracting deeper pockets traders the closer we get to strong catalysts coming up soon. Many watching on the sidelines will miss the train again.
Price still 5x away from minimum buyout equity residual.
Has already been approached by a few companies investigating potential to produce their products in the Sarnia asset according to Nextant report back in February. There has been strong interest from several companies before this buyout opportunity. This is especially an overhead cost cutting opportunity for their partners.
This bidding process has generated many interested bidders in a short time. They have 20 interested bidders. (18 from report + additional 2 mentioned in last hearing). This process often takes months and they can get extension if needed but they probably accepted these quick deadlines because they probably knew companies that are really interested in them.
"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.” They seem confident in the PR from June 18
Court assets reports don't show full buyout valuation.
When you are calculating the full valuation be aware that the Monitor reports asset numbers that pertain to the issue at hand. 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:
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
Minimum 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.”
big write-off for assuming Mitsui plant loan I think which they paid off last January. They never explained the 78mil off but some figured that out. I think they included some cost there to reduce their taxes somehow. I am sure it has not depreciate in value since Nextant stated in their report that
"The majority of the equipment onsite was in very good condition after being built roughly two years ago. Nexant believes that the Sarnia plant has been well maintained since construction, with a better overall condition than many plants that Nexant has valued."
bioamber-009_060718.pdf
far away from minimum .14 upside ahead
Even a conservative appraisal including plant, receivables, intellectual property, revenues forward, inventory, active customer list, etc minus debt is 300% higher than the current share price.
Interesting to see how this will get there in just a few days.
Potential buyers assessed by court appointed monitor Pwc and appraisal company last February Nexant. There are plenty of documents posted all over here for you to read or start on the first court monitor report and check the annex section at the bottom.
https://www.pwc.com/ca/en/services/insolvency-assignments/bioamber/monitor-s-reports.html
Fear of high RSI altitudes caused selloff so how to keep it steady?
When it goes up 1,300% from 0.005 to .07 non stop in 7 days without a breather people get nervous and suspicious of an imminent retracement. Even fearing that it will crash.
So those that entered at 0.005 fear a profit threat and just like the market, investors that are unsure why a stock is dropping prefer to get off until things are clear. Now that things are sure again, we know it will resume the bull trend, but with strong catalysts ahead and even a possible Q1 ER positive surprise this week, how to keep the RSI on check when you have this minimum x5 upside within weeks?
Obviously buyout by partner to cut markup cost is the most probable. Agree. Cargill could be the one. Mitsui too. But others may want in for the intellectual property or market share.
These are the ones caught my attention from the Pwc list of potential buyers:
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. They have a lot of green industry interest and Bioamber already have succinct buyers in Europe. They also have deep pockets.
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
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)
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
First Quarter Earnings will tentatively be announced Monday according to Wall Street Horizon and Schwab but you never know. Now I do know that if Q1 is a positive surprise that would be a strong bull event especially because it will help sell the business to the highest bidder. Forward revenue needs to be added to the full valuation. It has been rising continually.
Selling as operating business will benefit all stakeholders is what they have also stated several times.
It is why they got the DIP loan to stay operating as they seek buyers. Of course they cannot guarantee that the shares will have any value at the end of the restructuring because they cannot predict how much money bidders will offer but also because restructuring can move towards liquidation or selling to banks if they don't find a buyer.
Yet they generated many interested bidders in a short time. They already have 20 interested bidders. This process often takes months and they can get extension if needed but they probably accepted these quick deadlines because they probably knew companies that are really interested in them.
Last February, Nextant indicated that a few companies investigating potential to produce their products in their Sarnia plant have already approached them.
"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.” They seem confident in the PR from June 18
m0n heard the monitor say during June 20 hearing that “we are looking for a buyer” and “we believe there will be 2- 3”.
That's why they will get bidders to snap this almost new high capacity plant with all their intellectual property and active customers for a cheap price to them because the company is being sold as an ongoing concerned which is not the same as distressed.
Far from it, this is what the appraisal company said last February:
"The majority of the equipment onsite was in very good condition after being built roughly two years ago. Nexant believes that the Sarnia plant has been well maintained since construction, with a better overall condition than many plants that Nexant has valued."
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). They are currently in operations. If they were shutdown then it might fall under distress within months.
That's not a lot of money for most of the companies that would be interested.
bioamber-009_060718.pdf
Myriant/PTT could be one of the bidders. I am starting to realize that they could have the most interest and cash to snap this 3 year old plant with its intellectual property and accelerate their goals.
Pwc have them on the list and stated about them:
"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"