Avantium holds off on green-lighting FDCA flagship plant final investment decision

Due to the global COVID-19 crisis, negotiations with financial, commercial and other strategic partners have taken longer than previously foreseen. Avantium will therefore take additional time to determine whether it will be in a position to meet all the conditions required for a positive FID. The Company expects to be able to provide a further update on the FID on 24 March 2021, the publication date of its 2020 Annual Results.

The planned FDCA flagship plant would produce 5 kilotonnes of FDCA (furandicarboxylic acid) per annum, the key building block for PEF (polyethylene furanoate). Avantium believes that the 100% plant-based, fully recyclable polymer PEF is the next-generation plastic material. It helps meet the growing demand for high performance and sustainable products that address major environmental issues such as climate change and plastic waste.

Avantium will be in a position to take a positive FID concerning the construction of the FDCA flagship plant if the following key conditions are satisfied:

1. €150 million financing has been secured;
2. Offtake commitments for approximately 50% of the capacity of the flagship plant have been obtained;
3. The engineering has been finalised and the supply chain is in place.

Regarding the funding, a total financing package of €150 million is required. Avantium had already conditionally secured financing for the FDCA flagship plant amounting to €85 million, consisting of (i) the €20 million “PEFerence” Horizon 2020 grant awarded by Bio-based Industries Joint Undertaking (BBI JU)[i], (ii) a conditional financing package of €30 million by the Groningen consortium[ii], and (iii) the €35 million previously committed investment by Avantium (of which €22 million has been invested by year-end 2020).

As part of the conditional financing package of €30 million by the Groningen Consortium, (i) Avantium and the Groningen Consortium have now signed a term sheet agreeing that €20 million will be provided as an equity investment in Avantium’s Renewable Polymers subsidiary (“Avantium RNP”); the €10 million balance will be provided through (ii) €2.5 million of subordinated debt and (iii) a €7.5 million grant awarded by the National Programme Groningen, as announced on 7 December 2020.

Avantium has also signed a term sheet with the engineering company Worley[iii] for the latter to make a €10 million equity investment in Avantium RNP, structured as a contribution in kind aligning the economic interests of both parties in the execution phase of the FDCA flagship plant.

The investments by Worley and the Groningen consortium are subject to multiple conditions including the fulfilment of the key conditions.

With the Groningen consortium and Worley term sheets signed, now €95 million of the €150 million target for the flagship plant has been conditionally secured. Avantium RNP is actively discussing debt and equity financing with banks and other parties to be able to secure the total funding needed. Additionally, Avantium RNP has applied for support from national and EU instruments such as the EU Innovation Fund.

With its cash position at year-end 2020 at circa €26 million, Avantium is exploring multiple financing options to provide for its investment commitments to Avantium RNP.

Avantium has signed the first two conditional offtake agreements for the supply of PEF resin to manufacture food packaging for bottles and films. This represents approximately 20% of the flagship plant FDCA production capacity. These conditional offtake commitments are subject to a positive FID, financial closing, other approvals and party specific conditions.

Avantium RNP is proceeding with negotiations with multiple potential partners for additional offtake commitments.

The front-end-engineering and design (FEED) phase of the flagship plant is in the final stages. Avantium RNP and Worley agreed on the heads of terms[iv] of the execution contract for the FDCA flagship plant. Avantium RNP and Worley also foresee to collaborate in the execution phase of Avantium’s licensing strategy.

Avantium RNP and global specialty polyester supplier Selenis[v] have agreed on the principal terms for a multi-year commercial FDCA polymerisation agreement.

Tom van Aken, Chief Executive Officer of Avantium, comments:
“We are pleased to have formed partnerships to shape the value chain of PEF and we look forward to welcoming additional new partners on board to help realise the potential of PEF,” said CEO Tom van Aken.
“We have been focused on meeting the Key Conditions required to make a positive FID and move forward with the construction of an FDCA flagship plant. Much has been achieved but we recognise that there are key elements which still have to be secured. We will continue to work diligently on these areas and report back on our progress in March 2021.”

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