Intent is to produce cost competitive bio-succinic acid in China to
accelerate sales growth
MONTREAL, Dec. 19, 2016 /CNW Telbec/ -
BioAmber Inc. (NYSE: BIOA) has signed a non-binding letter of intent with South Korean-based CJ CheilJedang Corporation
(KRX:097950) ("CJCJ"). Under the terms of the agreement, BioAmber and CJCJ plan to establish a joint venture in
China to produce up to 36,000 metric tons of bio-succinic acid annually and commercialize the
output in Asia.
The goal is to competitively produce bio-succinic acid in China and quickly penetrate the
world's largest succinic acid market. This can be achieved rapidly, cost effectively and with limited capital
investment by retrofitting an existing CJCJ fermentation facility with BioAmber's succinic acid technology. CJCJ would incur
all capital costs required to retrofit their fermentation facility, including the capital needed during plant commissioning and
startup, and production would begin in Q1 2018. If market demand were to subsequently exceed production capacity, the joint
venture could expand production through debottlenecking and/or additional investment. The partners would also have a mutual
right-of-first-refusal to retrofit additional CJCJ fermentation facilities globally.
CJCJ would own 65% of the JV and BioAmber would own 35%. The JV would pay BioAmber a technology royalty for having access
to BioAmber's proven bio-succinic acid technology, and would pay CJCJ a tolling fee for producing bio-succinic acid on behalf of
the JV. Both partners would be entitled to a share of the profits equal to their respective equity ownership positions.
The proposed joint venture is subject to certain conditions, including technical and commercial due diligence, with the
definitive agreements expected to be signed by July 2017. As part of the letter of intent, BioAmber will be selling CJCJ
bio-succinic acid manufactured at its Sarnia, Ontario plant, so that CJCJ can undertake market
development in China and South Korea in the first half of
2017.
"While we remain focused on ramping up our Sarnia plant and building a second plant in
North America, this JV is an opportunity for BioAmber to accelerate the deployment of its
bio-succinic acid technology on a global scale without capital investment," stated Jean-Francois
Huc, BioAmber's CEO. "This joint venture would allow us to quickly penetrate the Chinese and broader Asian market and
accelerate cash flow and earnings for our shareholders. It would also serve as a blueprint for the build-out of additional
bio-succinic acid production with very limited capital investment."
"This JV is an opportunity for CJCJ to leverage BioAmber's unique, low pH yeast technology and utilize our existing fermentation
assets more effectively in order to competitively supply the growing market for bio-succinic acid in Asia," added Dr. Hang Duk Roh, Head of CJ CheilJedang BIO.
Fabrice Orecchioni, BioAmber's COO, added: "CJCJ has visited our Sarnia facility and we have
visited their intended plant in China. Both partners are confident that the China plant can
be reconfigured to quickly produce bio-succinic acid, for a fraction of what it cost us to build our Sarnia facility."
About CJ CheilJedang Corporation
CJ CheilJedang (CJCJ) is a Korean-based food, feed and bioscience company, and a subsidiary of the CJ Group. CJCJ
is a global leader in the area of industrial biotechnology, with innovations in fermentation and purification technologies.
CJCJ is also a leading producer of fermentation-based products such as feed amino acids, monosodium glutamate and nucleotides, with
global manufacturing and business operations in six continents. As a socially responsible company, CJCJ strives towards
practicing carbon-neutral manufacturing operations by utilizing renewable raw materials and developing value-added co-products to
minimize waste into the environment. CJCJ BIO is a division of CJ CheilJedang and operates world-scale fermentation facilities in
the United States, China, Indonesia, Malaysia and Brazil.
About BioAmber
BioAmber (NYSE: BIOA) is a renewable materials company. Its innovative technology platform combines biotechnology and
catalysis to convert renewable feedstock into building block materials that are used in a wide variety of everyday products
including plastics, paints, textiles, food additives and personal care products. For more information visit www.bio-amber.com
Forward-Looking Statements
This press release contains forward-looking statements, which are subject to substantial risks, uncertainties and
assumptions, including, without limitation, statements related to (i) the potential joint venture with CJCJ which remains subject
to several conditions, including due diligence, the negotiation of key considerations and definitive agreements, (ii) the projected
capital costs and scheduled completion of the retrofit of CJCJ's plant located in China, (iii) the
use of our technology in such plant with the goal to produce high quality bio-based succinic acid, and (iv) future sales
projections of products produced at such plant. These statements often include words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate," "seek," "will," "may" or similar expressions. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee that the events and circumstances reflected in the
forward-looking statements will be achieved or occur and the timing of events and circumstances and actual results could differ
materially from those projected in the forward- looking statements. Accordingly, you should not place undue reliance on these
forward-looking statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise
publicly any forward-looking statements, whether as a result of new information, future events or otherwise. For additional
disclosure regarding these and other risks faced by BioAmber, see disclosures contained in BioAmber's public filings with the SEC
including, the "Risk Factors" section of BioAmber's most recent Annual Report on Form 10-K and the recent quarterly reports on Form
10-Q.
SOURCE BioAmber Inc.
