1. Introduction
The Board of Directors of ABT is pleased to announce that its associated company, Nexfuel has on 16 April 2014 entered into a Biofuels Offtake Agreement (“Agreement”) with Concord for the offtake sale of all of the biofuels products to be produced by one or more subsidiaries to be established under Nexfuel using the technology developed by Cool Planet Energy Systems, Inc. (“Cool Planet”) (each, a “Project Company”).
The Agreement is signed following the Plant Construction agreement which was previously signed between Nexfuel and Cool Planet on 20 February 2014, giving Nexfuel the licensing rights to Cool Planet’s technology to develop fuel production plants in Malaysia (“Cool Planet Technology”). Nexfuel intends to establish via the Project Companies, one or more of such fuel production plants with the first targeted to be completed by year 2016.
2. Information on Concord
From its inception in 1998, Concord has grown to become one of Singapore and South East Asia’s leading crude oil and refined products trading companies. Today, based in Singapore, Concord Energy Group is an organization that is constantly developing new aspects of its business as it evolves into an integrated, asset-based energy company.
Headquartered in Singapore, Concord has offices in Dubai, Indonesia, Malaysia, Switzerland, China and United Kingdom.
3. Information on Nexfuel
Nexfuel is a company incorporated in Labuan, Malaysia with a paid up share capital of USD125,000 comprising 125,000 ordinary shares of USD1.00 each and is involved in provision of biomass processing and phytonutrients processing technologies. Nexfuel is a 20% associated company of ABT.
4. Information on Cool Planet
Cool Planet is a proprietor of a fuel processing technology that is able to convert non-food biomass into high-octane, dropin biofuels (gasoline). Cool Planet’s conversion process also produces a by-product called biochar, a solid material that is obtained through the carbonization of the biomass. Biochar, when blended with soil, has the unique ability to vastly improve plant harvests while reducing the amount of water and fertilizer needed. The process can be carbon negative, capable of removing over 100 percent of the carbon footprint for every gallon used, thus reversing the consequences of the use of fossil fuels.
Cool Planet’s technology has a broad portfolio of pending and granted patents.
5. Salient Features of the Agreement
Salient features of the Agreement include the following:-
a) In accordance to the Agreement, Nexfuel will cause each Project Company to sell, and the Buyer will purchase, all of the biofuel products produced at its Facility.
b) This Agreement will be effective as of the Effective Date and, without prejudice to terms relating to the early termination of this Agreement, shall endure until the sixth (6th) anniversary of the date of completion of the first delivery of Product from the first Facility of the first Project Company.
c) The pricing of which is to be referenced to the monthly average of mid daily quotations as published in Platts Asia Pacific / Arab Gulf Marketscan under the heading ‘Singapore’ (“Platts Singapore”).
d) Project Company will provide Buyer, on the Commencement of Production and by the 20th day of each calendar month thereafter, a rolling schedule for the following twelve (12) months specifying the amount of each Product that Project Company anticipates, in good faith, delivering to Buyer from the Facility for each month of that twelve (12) month period.
e) The grade and specifications of the Product delivered shall be determined by reference to the results of sampling and analysis of the Product carried out by an Inspector, appointed and paid for jointly by the Project Company and the Buyer.
f) The Agreement and its construction, validity and performance and any non-contractual obligations arising from or connected with it shall be governed by the laws of England and Wales to the exclusion of any other law. For the avoidance of doubt, the United Nations Convention on Contracts for the International Sale of Goods of Vienna, 11 April 1980, and any law enacting or giving force to the same or any parts of it, shall not apply to the Agreement.
The definitions used in this section are as follows:-
“Buyer” means Concord or a nominated Affiliate of Concord;
“Commencement of Production” means, in respect of a specific Facility, the date on which the Project Company, acting in good faith, notifies the Buyer that commissioning and testing of the Facility has been successfully completed and commercial production of one or more Products has commenced at the Facility or, in the absence of any such notification, the first date by which the total aggregated amount of Product produced at the Facility is equal to or greater than the minimum delivery amount as specified in the Agreement for the Facility;
“Effective Date” means the date on which the Agreement is signed by both parties;
“Facility” means any and all facilities of a specific Project Company that are located in Malaysia, whether existing now or in the future, and at which Products are produced using the Cool Planet Technology;
“Products” means the products identified as the distilled blend stock, raw blend stock (which includes all biofuel products other than distilled blend stock that are in the opinion of the Buyer suitable to be marketed for sale in the gasoline market) and other useful products (which includes all biofuel products, other than distilled blend stock or raw blend stock, such as benzene, jet/kerosene/diesel blend stocks, and lubricant blend stocks), produced at any Facilities that are in the opinion of the Buyer suitable to be marketed for sale in the refined petroleum products market.
6. Effects of the Agreement
The Agreement is not expected to have any material effect on the earnings per share of ABT Group for the financial year ending 31 January 2015, share capital, major shareholders’ shareholdings, net assets per share, gearing and dividend policy of ABT Group. Nonetheless, the Agreement is expected to contribute positively to the future earnings of the Company once the Project Companies are in place.
There are no liabilities, including contingent liabilities or guarantees, expected to be assumed by ABT from the Agreement.
7. Approvals Required
The Agreement is not subject to approval of the shareholders of ABT and relevant authorities.
8. Directors’ and Major Shareholders’ Interest
None of the Directors and major shareholders of ABT and person(s) connected to them have any direct or indirect interest in the Agreement.
9. Statement by Board
The Board of Directors of ABT is of the opinion that the Agreement is in the best interest of ABT.
A copy of the Agreement is available for inspection at the registered office of ABT during normal business hours from Monday to Friday (except public holidays) at B-11-10, Level 11 Megan Avenue II, Jalan Yap Kwan Seng, 50450 Kuala Lumpur for a period of three (3) months from the date of this announcement.
This announcement is dated 17 April 2014.
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