Technological watch
Avantium focuses on maximising the potential of its FDCA and PEF technology
Avantium N.V., a leading company in renewable and circular polymer materials, will provide an update on its progress, strategy and plans during a Capital Markets Day it will hold for institutional investors today at 10:00 hrs CET and for retail investors today at 15:00 hrs CET.
Avantium is reaching the inflection point
-To date, Avantium has signed 15 commercial offtakes agreements for FDCA and PEF from the FDCA Flagship Plant, for a diverse range of applications;
-To enable the rapid deployment of FDCA and PEF in line with the demands of the market, Avantium aims to sell multiple technology licenses;
Securing additional financing for the FDCA Flagship Plant
“To reinforce our strategic focus on the commercialisation of FDCA and PEF, we have decided to put further investments in our Ray TechnologyTM on hold until strategic equity partners have been secured. This was not an easy decision, since this means that we will also part ways with some of our talented employees. We deeply appreciate their contributions to Avantium and will do our best to support them in their future endeavors.”
“We are very pleased that we have secured an additional financing package for our FDCA Flagship Plant and highly value the support from our strategic partners and lenders. Through this secured financing package, together with a successful equity raise, we expect to remain well capitalised until our FDCA Flagship Plant is fully commercially operational. We are on the verge of a significant inflection point for Avantium. We look forward to bringing our exciting, innovative product PEF to a wide range of large end-markets around the world, thereby creating substantial value for our shareholders.”
Progress, strategy and capital planAvantium Renewable Polymers is on track to produce commercial quantities of FDCA from its own Flagship Plant, thereby unlocking multiple additional licensing opportunities for its FDCA technology. These new licenses a recentral to Avantium’s business plan.
The construction of the FDCA Flagship Plant in Delfzijl, the Netherlands, continues to progress in line with the goal of starting FDCA production in the second half of 2024. Avantium plans to commission the FDCA Flagship Plant in phases, starting in Q1 2024, followed by the sequential start-up of the different sub-units of the Flagship Plant. A video demonstrating the progress on the FDCA Flagship Plant is to be found on the Avantium website or Volta Technology has required limited funding from Avantium. In 2023, Volta Technology successfully entered into agreements with SCGC and Norsk Hydro, with the intention of continuing the development of Volta Technology with their (financial) support. In 2024, the Company intends to continue development of this technology and scale-up in the next two years to a pilot plant with an indicative capacity of 10 tonnes per annum, provided that it can secure strategic or financial partnerships to fund this next phase of development.
Avantium R&D Solutions is the revenue/cash generating arm of Avantium. Avantium R&D Solutions offers advanced catalyst R&D systems and services to customers worldwide. In 2022, Avantium R&D Solutions announced a revised strategy to target sustainable chemistry opportunities in four emerging markets: green hydrogen, chemical plastics recycling, adsorption and sustainable chemistry. Avantium will continue to run Avantium R&D Solutions as a stand-alone unit with its own leadership team. whilst continuing to look for strategic opportunities to grow the business.
Financing package for Avantium Renewable PolymersSince the start of construction of the FDCA Flagship Plant in April 2022, a first-of-a-kind commercial facility, the project has been subjected to exceptionally challenging external circumstances, including high inflation, scarcity of materials and contractors, and supply chain constraints. Avantium continuously monitors the impact of these circumstances on the project and has recently finalised a thorough risk analysis together with its engineering partner Worley. This analysis has resulted in an updated budget, capital plan, and commissioning and start-up plan for the project. The total expected costs for the Renewable Polymers business unit, including the construction of the FDCA Flagship Plant, are now estimated to amount to approximately €255 million, which increase is primarily due to inflation and higher interest rates. The increased CAPEX requirement for the FDCA Flagship Plant is now estimated at €33 million, bringing the total CAPEX to €149 million (€159 million before the risk-sharing mechanism with Worley).
Based on third-party benchmarking, these increases are in line with the average cost increases observed in other comparable international EPC projects currently under construction. In support of achieving commercial operations of the FDCA Flagship Plant and the roll-out of its licensing strategy, Avantium Renewable Polymers requires an additional €12 million for working capital, commissioning, and start-up activities and operational costs, bringing the total OPEX to €83 million by the end of 2024. Interest costs have increased to €23 million (from €12 million).
The estimated total cost increase will be covered by an additional financing package of €64.5 million, comprising: (i) subordinated shareholder loans of €2.5 million by the BPIG consortium, €4.2 million by Worley and €42.9 million by Avantium N.V., and (ii) a €15 million increase of the debt facility by ABN AMRO Bank, ASN Bank, ING Bank and Rabobank, as well as Invest-NL, adding to the existing €90 million debt facility package (fully drawn by Q3 2023). This debt facility increase is subject to certain terms and conditionsiv.
Following this additional financing by the three shareholders in Avantium Renewable Polymers (Avantium, BPIG consortium and Worley), the shareholder structure of Avantium Renewable Polymers remains unchanged, with Avantium still holding 77.4% equity in its subsidiary.
Extraordinary General MeetingAvantium intends to raise €50 million in equity capital, which is expected to cover Avantium’s funding requirement related to the financing package for Avantium Renewable Polymers and to remain properly capitalised until the FDCA Flagship Plant is operating at its full capacity. This could be increased by up to €20million, allowing Avantium to further strengthen its financial profile. The Company is in advanced discussions with several parties on pre-commitments for this equity raise. Avantium has appointed ABN AMRO Bank N.V. and Bryan, Garnier & Co as joint global coordinators to lead this equity raise and other advisors may be appointed in due time. To seek shareholders’ approval for the equity raise, Avantium is calling an Extraordinary General Meeting of Shareholders (EGM), to be held on 24 January 2024. The meeting documents, consisting of the EGM agenda and the explanatory notes, are available on the Avantium website: https://www.avantium.com/corporate-governance/#shareholders-meeting
About AvantiumAvantium is a pioneering commercial-stage company focused on renewable & circular polymer materials. Avantium develops and commercialises innovative technologies for the production of materials based on sustainable carbon feedstocks, i.e. carbon from biomass or carbon from the air (CO2). The most advanced technology is the YXY® Technology that catalytically converts plant-based sugars into FDCA (furandicarboxylic acid), the key building block for the sustainable plastic PEF (polyethylene furanoate). Avantium has successfully demonstrated the YXY® Technology at its pilot plant in Geleen, the Netherlands, and is currently constructing of the world’s first commercial plant for FDCA, with large-scale production of PEF expected in 2024. Avantium also provides R&D solutions in the field of sustainable chemistry and is the leading provider of advanced catalyst testing technology and services to accelerate catalyst R&D. Avantium works in partnership with like-minded companies around the globe to create revolutionary renewable chemistry solutions from invention to commercial scale.
Avantium’s shares are listed on Euronext Amsterdam and Euronext Brussels (symbol: AVTX). Avantium is incorporated in the Euronext Amsterdam SmallCap Index (AScX). Its offices and headquarters are in Amsterdam, the Netherlands.
i Revenue based on contractual income, not considering the possible impact of IFRS 15
ii
Avantium is reaching the inflection point
- The Company is fully focused on launching commercial operations at its FDCA Flagship Plant:
-To date, Avantium has signed 15 commercial offtakes agreements for FDCA and PEF from the FDCA Flagship Plant, for a diverse range of applications;
- The FDCA Flagship Plant serves as a stepping stone in Avantium’s licensing strategy:
-To enable the rapid deployment of FDCA and PEF in line with the demands of the market, Avantium aims to sell multiple technology licenses;
- Assuming the successful start-up of the FDCA Flagship Plant in 2024 and the sale of multiple technology licenses, management’s ambition is that the Company could generate €100 million in revenuesi and be EBITDA positive in 2026.
- The Company is prioritising the commercialisation of its FDCA and PEF technology and the acceleration of its licensing strategy:
- As a result, further investments in the Ray TechnologyTM to produce the plant-based glycols, plantMEG and plantMPG, have been put on hold until appropriate strategic equity partners have been secured:
Securing additional financing for the FDCA Flagship Plant
- The total expected costs for Avantium Renewable Polymers, including the construction of the FDCA Flagship Plant, are now estimated to amount to approximately €255 million by the end of 2024, an increase of approximately €63 million compared to the initial forecast of €192 million; these cost increases have been primarily driven by inflation, interest rates and supply chain disruption being experienced by EPC construction projects all around the world;
- Avantium Renewable Polymers, which is the entity responsible for the FDCA Flagship Plant, has successfully received commitments for a €64.5 million financing package from its shareholders (BioPlastics Investment Groningen (BPIG) consortium, Worley and Avantium N.V.) and from its lenders, to cover the anticipated cost increases until the FDCA Flagship Plant is operational.
- In order to cover its share in the financing package for Avantium Renewable Polymers and to remain properly capitalised until the FDCA Flagship Plant is fully operational, Avantium intends to raise €50 million in equity capital.
“To reinforce our strategic focus on the commercialisation of FDCA and PEF, we have decided to put further investments in our Ray TechnologyTM on hold until strategic equity partners have been secured. This was not an easy decision, since this means that we will also part ways with some of our talented employees. We deeply appreciate their contributions to Avantium and will do our best to support them in their future endeavors.”
“We are very pleased that we have secured an additional financing package for our FDCA Flagship Plant and highly value the support from our strategic partners and lenders. Through this secured financing package, together with a successful equity raise, we expect to remain well capitalised until our FDCA Flagship Plant is fully commercially operational. We are on the verge of a significant inflection point for Avantium. We look forward to bringing our exciting, innovative product PEF to a wide range of large end-markets around the world, thereby creating substantial value for our shareholders.”
Progress, strategy and capital planAvantium Renewable Polymers is on track to produce commercial quantities of FDCA from its own Flagship Plant, thereby unlocking multiple additional licensing opportunities for its FDCA technology. These new licenses a recentral to Avantium’s business plan.
The construction of the FDCA Flagship Plant in Delfzijl, the Netherlands, continues to progress in line with the goal of starting FDCA production in the second half of 2024. Avantium plans to commission the FDCA Flagship Plant in phases, starting in Q1 2024, followed by the sequential start-up of the different sub-units of the Flagship Plant. A video demonstrating the progress on the FDCA Flagship Plant is to be found on the Avantium website or Volta Technology has required limited funding from Avantium. In 2023, Volta Technology successfully entered into agreements with SCGC and Norsk Hydro, with the intention of continuing the development of Volta Technology with their (financial) support. In 2024, the Company intends to continue development of this technology and scale-up in the next two years to a pilot plant with an indicative capacity of 10 tonnes per annum, provided that it can secure strategic or financial partnerships to fund this next phase of development.
Avantium R&D Solutions is the revenue/cash generating arm of Avantium. Avantium R&D Solutions offers advanced catalyst R&D systems and services to customers worldwide. In 2022, Avantium R&D Solutions announced a revised strategy to target sustainable chemistry opportunities in four emerging markets: green hydrogen, chemical plastics recycling, adsorption and sustainable chemistry. Avantium will continue to run Avantium R&D Solutions as a stand-alone unit with its own leadership team. whilst continuing to look for strategic opportunities to grow the business.
Financing package for Avantium Renewable PolymersSince the start of construction of the FDCA Flagship Plant in April 2022, a first-of-a-kind commercial facility, the project has been subjected to exceptionally challenging external circumstances, including high inflation, scarcity of materials and contractors, and supply chain constraints. Avantium continuously monitors the impact of these circumstances on the project and has recently finalised a thorough risk analysis together with its engineering partner Worley. This analysis has resulted in an updated budget, capital plan, and commissioning and start-up plan for the project. The total expected costs for the Renewable Polymers business unit, including the construction of the FDCA Flagship Plant, are now estimated to amount to approximately €255 million, which increase is primarily due to inflation and higher interest rates. The increased CAPEX requirement for the FDCA Flagship Plant is now estimated at €33 million, bringing the total CAPEX to €149 million (€159 million before the risk-sharing mechanism with Worley).
Based on third-party benchmarking, these increases are in line with the average cost increases observed in other comparable international EPC projects currently under construction. In support of achieving commercial operations of the FDCA Flagship Plant and the roll-out of its licensing strategy, Avantium Renewable Polymers requires an additional €12 million for working capital, commissioning, and start-up activities and operational costs, bringing the total OPEX to €83 million by the end of 2024. Interest costs have increased to €23 million (from €12 million).
The estimated total cost increase will be covered by an additional financing package of €64.5 million, comprising: (i) subordinated shareholder loans of €2.5 million by the BPIG consortium, €4.2 million by Worley and €42.9 million by Avantium N.V., and (ii) a €15 million increase of the debt facility by ABN AMRO Bank, ASN Bank, ING Bank and Rabobank, as well as Invest-NL, adding to the existing €90 million debt facility package (fully drawn by Q3 2023). This debt facility increase is subject to certain terms and conditionsiv.
Following this additional financing by the three shareholders in Avantium Renewable Polymers (Avantium, BPIG consortium and Worley), the shareholder structure of Avantium Renewable Polymers remains unchanged, with Avantium still holding 77.4% equity in its subsidiary.
Extraordinary General MeetingAvantium intends to raise €50 million in equity capital, which is expected to cover Avantium’s funding requirement related to the financing package for Avantium Renewable Polymers and to remain properly capitalised until the FDCA Flagship Plant is operating at its full capacity. This could be increased by up to €20million, allowing Avantium to further strengthen its financial profile. The Company is in advanced discussions with several parties on pre-commitments for this equity raise. Avantium has appointed ABN AMRO Bank N.V. and Bryan, Garnier & Co as joint global coordinators to lead this equity raise and other advisors may be appointed in due time. To seek shareholders’ approval for the equity raise, Avantium is calling an Extraordinary General Meeting of Shareholders (EGM), to be held on 24 January 2024. The meeting documents, consisting of the EGM agenda and the explanatory notes, are available on the Avantium website: https://www.avantium.com/corporate-governance/#shareholders-meeting
About AvantiumAvantium is a pioneering commercial-stage company focused on renewable & circular polymer materials. Avantium develops and commercialises innovative technologies for the production of materials based on sustainable carbon feedstocks, i.e. carbon from biomass or carbon from the air (CO2). The most advanced technology is the YXY® Technology that catalytically converts plant-based sugars into FDCA (furandicarboxylic acid), the key building block for the sustainable plastic PEF (polyethylene furanoate). Avantium has successfully demonstrated the YXY® Technology at its pilot plant in Geleen, the Netherlands, and is currently constructing of the world’s first commercial plant for FDCA, with large-scale production of PEF expected in 2024. Avantium also provides R&D solutions in the field of sustainable chemistry and is the leading provider of advanced catalyst testing technology and services to accelerate catalyst R&D. Avantium works in partnership with like-minded companies around the globe to create revolutionary renewable chemistry solutions from invention to commercial scale.
Avantium’s shares are listed on Euronext Amsterdam and Euronext Brussels (symbol: AVTX). Avantium is incorporated in the Euronext Amsterdam SmallCap Index (AScX). Its offices and headquarters are in Amsterdam, the Netherlands.
i Revenue based on contractual income, not considering the possible impact of IFRS 15
ii
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 870292.
