6th Jun 2005 07:01
Stanelco PLC06 June 2005 6 June 2005 Stanelco plc acquire BIOTEC Group For $25 million Stanelco plc ("Stanelco"), the RF (radio frequency) applications group, ispleased to announce that it has entered into an agreement, subject toshareholder approval, for the acquisition of the entire issued share capital ofBiotec Holding GMBH and subsidiaries (the "Biotec Group" or "Biotec") from EKI(E. Khashoggi Industries LLC) for a total of US$25 million payable over a 24month period. Of the total consideration, US$1.23 million has already been paid in cash to EKIas a non-refundable deposit. A further US$11.27 million is due to be paid oncompletion of the acquisition which will be satisfied in cash. A furtherUS$6.25 million in cash is due to be paid in 12 months and a final payment ofUS$6.25 million in cash is due 12 months thereafter. The deferred elements arenot subject to performance criteria. Stanelco is currently considering a numberof options for funding the acquisition, which may include the entering intoarrangements for debt facilities and/or a placing of ordinary shares for cash. Biotec is one of the world's leading exponents of starch technology and has aconsiderable intellectual property portfolio, including many patents, extendingto uses in pharmaceutical and edible applications. It also has ranges ofproducts that are ready for commercialisation within the food and beverageindustries. Biotec's proprietary pharmaceutical grade film is suited for applications whereit replaces conventional polymers such as gelatine. Depending upon thespecification the film has a cost base of between US$5 to US$8 per kilogramme,offering customers significant cost savings when compared to gelatine and othermaterials which it may replace. In addition, being a mono material, wastegenerated during manufacture can often be immediately re-used. The starch products from Biotec are currently used by Stanelco in the followingprojects: Starpol starch blend films used in CradleWrap packaging; sheet formaking food trays; starch film for air pillows; starch pellets for food trays;and starch film for edible packaging. Biotec will also be a supplier of film tothe InGel capsule project. Natural starch is one of the lowest cost biodegradable, compostable,replenishable materials and Biotec has a unique portfolio of products includingThermoplastic starch ("TPS"), which enables the use of environmentallyresponsible material in place of petro-plastics. TPS is also free fromgenetically modified starch. Stanelco's RF Sealing and Welding technology can beused to process starch polymers without the degradation or cross-linking causedby other methods such as thermal processing which can render the materialunsuitable for food and pharmaceutical applications. Biotec's managing director Harald Schmidt, who is one of the world's leadingexperts on starch polymers, will be taking a three year service contract withStanelco and will remain as managing director of Biotec. His experience andskill base will add significantly to the Stanelco businesses. At the last accounting reference date 31 December 2004 Biotec's Net Assets wereEUR 6.1m and in the last financial year ended 31 December 2004 Biotec made a netloss of EUR1.3m. This loss was before charging interest of EUR 1m on loans fromBiotec's parent which will no longer be a relevant item after the acquisition. A circular will be posted to shareholders in due course seeking, inter alia,approval for the transaction. The Age of Reason Foundation, representing 24.55%of the issued share capital has agreed to give irrevocable undertakings insupport of the transaction. Ian Balchin, CEO of Stanelco said: "This exciting acquisition is the next piece in the jigsaw that will enableStanelco to become one of the world's leading exponents of viable, alternative,environmentally responsible packaging methods. It has become apparent that withthe rise in oil prices, the cost of petroleum based packaging materials isinevitably increasing faster than our alternatives - making them increasinglyattractive. In particular APET/PE sheet for making food trays is currently inthe order of £1.70 per kilo and the target price of the Biotec material will bein the region of £1.80 per kilo. There are also a large number of environmentalbenefits that are driving the shift from petro-plastics to sustainablealternatives. I believe the acquisition positions the Stanelco Group to takeadvantage of this rapidly expanding market place and specifically it will enableStanelco to offer its product ranges that contain starch product at up to 20%less than is currently available. This acquisition also creates a furtherbarrier to entry for potential competition in the GREENSEAL project as we willbe able to provide a turnkey, ecologically, environmentally responsible solutionto MAP food packaging requirements. Scott Houston of EKI said: "We are extremely impressed with the speed and the professionalism in whichStanelco and their advisors worked during the week to close the transaction.Stanelco had previously performed their due diligence and an offer to purchasewas submitted only on Monday. We are delighted with the outcome and as Biotec will remain a key supplier toits former sister company, Earthshell Inc, we wish both parties enormous successin the future in this enormously exciting, emerging market." Ian Balchin continued, "Biotec dovetails with our RF technology, ourwater-soluble and biodegradable technology at Adept Polymers and the packagingdesign and development skills of Aquasol, all subsidiaries of Stanelco, andgives greater access to world markets for the whole Group. We are particularlyrelishing the prospect of unlocking Biotec's potential in conjunction withleading supermarkets to supply mass-markets. I am also pleased to report that the second trial for GREENSEAL with ASDA hasmoved into the retail phase, having passed the stability (shelf-life) test withflying colours. The third and final trial is commencing this week. As announcedon 23 May, Stanelco has taken its first formal commercial order from a dedicatedASDA supplier and is preparing itself for negotiations for further orders." Ends For further information please contact: Ian Balchin, Chief Executive Stanelco PLC Tel: +44 (0)2380 867100 Jonathon Brill/Billy Clegg Financial Dynamics Tel: +44 (0)20 7831 3113 Notes to Editors: About Stanelco plc The Stanelco Group of companies (the Group) has brought together expertise inradio frequency (RF) technology, RF applications and biodegradable materialsciences to create a revolutionary range of packaging technologies. Stanelco's philosophy is that new products and processes must offer solutionsand applications which: • give higher added value, • are greener, more environmentally sustainable than those they replace • and have protectable intellectual property rights. Stanelco will develop the products and processes to a demonstration stage andthen work with partners in order to reach the markets; and under thesecircumstances Stanelco will usually seek to license its technology. Stanelcoinvests considerable time and resources in ensuring its technologies areprotected via layers of patents wherever possible. In this way Stanelco believes it can minimise commercial risk and preserve thehighest value for shareholders. The products offering the prospect of near term revenue generation are beinggiven priority over the Group's resources. Stanelco was founded in 1953 and is a world leader in the development of radiofrequency technologies for processing polymers for edible and packagingapplications and the design and manufacture of optical fibre technology,induction heating and dielectric welding equipment. Stanelco's Currentdevelopments include GREENSEAL Food tray lidding technology, STARPOL (starch /pva blended material), FrogPack high impact low cost packaging format,CradleWrap range of biodegradable air cushion packaging, SolutapeTM 100%watersoluble films and adhesives, Biodegradable Airbag (void fill) packaging,water-soluble detergent capsules, edible sachets and waste packing. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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