BioAmber Inc fka BIOAQ

[Koan]

BioAmber Valuations

As per the recent judgement, Judge Pinsonnault agreed with counsel that the Vinmar Contracts have great/substantial value:



The Vinmar contract is a 15 year offtake agreement for 100% of the BDO and THF output. This is a billion-plus dollar agreement. BDO and THF are derivative high profit products made from bio-succinic acid. Vinmar has also signed an offtake agreement for a portion of the bio-succinic acid production.

The Sarnia plant produces bio-based succinic acid. In order to fully execute on the Vinmar contract, a second manufacturing plant would need to be built that would produce 200,000 metric tons per year. Sarnia's nameplate capacity is 30,000 metric tons per year.

BioAmber Inc. has already completed two of four phases with the Department of Energy's Loan Program Office under the Title XVII Innovative Clean Energy Projects for a $360 million loan guarantee to build a second manufacturing plant.

Now, LCY Chemical Corp and Visolis enter and purchase the Sarnia plant for an upfront purchase consideration for far below what it would cost to build a new plant; all this under CCAA as a Foreign Main Proceeding and structured as an asset purchase, no doubt one of the reasons being for tax purposes. PwC and Visolis reference 2-step transactions in the "Letter of Intent for Investment in BioAmber Inc.".

This is saying nothing about NOLs or comparative cost valuation; what it would cost in both time and money for a company to set up the same structure as BioAmber Inc. -- arguably 5 to 10 years and hundreds of millions to billions of dollars.

That is why this is so attractive to LCY Chemical Corp (which is now a private company owned by KKR).

And again, it must be realized that the structure of this purchase is being handled under a cross-border scenario, as there are three separate companies, the US Parent and two foreign subsidiaries:

1. BioAmber Inc. (US Parent company, where the shares are)
2. BioAmber Sarnia Inc. (Canadian subsidiary, sole shareholder is BioAmber Inc.)
3. BioAmber Canada Inc. (Canadian subsidiary)

The Nexant appraisal estimated the cost to produce a 30 metric ton succinic acid plant in Canada at between USD $132 - $140 million, and further valued it as an operating facility within the range of USD $53 - $72 million. Those valuations would either meet or sufficiently exceed BioAmber Sarnia Inc.'s debt.

Couple the physical assets with the NOLs, billion dollar Vinmar contract, and comparable cost valuations to produce the same in both time and money (Nexant only valued the Sarnia plant); and valuations range from hundreds of millions to billions.

The market is currently valuing the company at approximately between USD $5 and 9 million, in part because the tax structured asset purchase for the Sarnia plant only showed an initial transaction for an upfront purchase consideration of USD $4.3 million. Again, this transaction was structured under the CCAA in a cross-border scenario and added to the complexity of any 2-step or multi-step process. While the CCAA handled the three BioAmber companies all at once for administrative purposes, legally the courts necessarily treat each corporation separately.

Still, while the market values BioAmber at over double the upfront purchase consideration, it stands as fact that these valuation ranges are woefully inadequate and not even close to BioAmber's intrinsic value.

Given the Nexant appraisal, NOLs, and Vinmar contracts alone at minimum speaks to a valuation of hundreds of millions. Period.

Do Govern Yourselves Accordingly.