PyroGenesis Canada Inc. (http://pyrogenesis.com) (NASDAQ: PYR)
(TSX: PYR) (FRA: 8PY), a high-tech Company (hereinafter referred to
as the “Company” or “PyroGenesis”), that designs, develops,
manufactures and commercializes advanced plasma processes and
sustainable solutions to reduce greenhouse gases (GHG), is pleased
to announce today that, further to its press release dated April
27th, 2021, it has finalized its strategic acquisition of
AirScience Technologies Inc. and its subsidiaries (collectively,
“AST”) for an amended total cash consideration of approx. $4.4MM
(the “Purchase Price”).
The Purchase Price will be paid upon various
contract and business-related milestones. Should any of the
milestones not be reached within the next three (3) years, the
purchase price shall be adjusted downward. The Purchase Price shall
be paid as follows:
- Approximately 20% upon receipt of payment of US$4MM (approx.
Can$5MM) under an existing letter of credit from AST’s client
1,
- Approximately 20% upon final acceptance test/bank guarantee
from client 1,
- Approximately 25% upon receipt of final acceptance report for
client 2,
- Approximately 5% upon final acceptance test, or equivalent from
each of client 3 and 4 (total 10%), and
- Approximately 25% upon conversion of $4MM in pipeline to signed
contracts.
AST, a Montreal-based company, offers
technologies, equipment, and expertise in the area of biogas
upgrading, as well as air pollution controls. AST designs and
builds: (i) gas upgrading systems to convert biogas to renewable
natural gas (RNG); (ii) pyrolysis-gas purification; (iii) biogas
& landfill-gas flares and thermal oxidizers; and (iv)
purification of coke-oven gas (COG) (a by-product in the primary
steel industry arising from the conversion of coal into coke) into
high purity hydrogen, which is in high demand across the industry.
AST is also known for its line of landfill gas flares which reduce
greenhouse gas (“GHG”) emissions specifically from landfills.
PyroGenesis will operate AST as a wholly owned
subsidiary and retain the current management and staff, comprising
of approximately 20 employees. AST has current operations across
North America, Italy and India. The acquisition is expected to
positively impact PyroGenesis’ earnings per share in 2021
“We are extremely excited about today’s
announcement as it essentially springboards PyroGenesis into the
RNG market where we believe there is a significant unmet need for
RNG-providers, particularly in North America,” said P. Peter
Pascali, CEO and Chair of PyroGenesis. “This acquisition
effectively provides PyroGenesis with a 15+ year advantage compared
to building these operations from scratch. In addition, we will now
have a presence in Italy, and India (where AST has already
developed relationships with several multi-billion-dollar companies
who are currently using their technology). Moreover, this
acquisition provides potential synergies with our land-based waste
destruction offerings which, if successful, will significantly
increase their value to the market. AST’s technology complements
PyroGenesis’ existing offerings and further strengthens
PyroGenesis’ position as an emerging leader in GHG solutions for
sustainable long-term growth.”Mr. Pascali continues to discuss this
acquisition in the following Q&A format:
Q1. What is the significance of this
acquisition today?
A. This acquisition provides us
with an immediate entry into the RNG marketplace where we believe
there is a significant need for RNG providers particularly given
the trend towards regulating minimum required amounts of RNG within
gas pipelines.
Governments are now legislating requirements for
gas distributors to incorporate RNG into their pipelines. This has,
in turn, created a significant demand for biogas upgrading
facilities worldwide, but particularly in North America, and it is
this need that PyroGenesis is now targeting.
The movement to transition economies to net zero
emissions is evidenced by the US’ commitment to cut GHG emissions
in half by 2030, and to zero by no later than 2050.1
Closer to home, the Quebec Government recently
incorporated RNG and green hydrogen initiatives into their strategy
to reduce GHG emissions in their 2030 plan for a green economy. In
this plan, the Québec Government launched the first steps of the
plan, covering 2021-2026. This initiative was backed by a budget of
no less than $6.7 billion over the ensuing five years. More
specifically, it earmarked over $200 million for RNG projects in
the form of investments in the financing of RNG production and
distribution projects.2
In addition, this acquisition has provided
PyroGenesis with an immediate presence in both Italy and India and
established relationships with several multi-billion-dollar
companies. AST also boasts a list of satisfied clients which now
provides PyroGenesis with the “Golden Ticket”, described in
previous press releases. The Golden Ticket provides an opportunity
to i) cross sell other PyroGenesis offerings (such as replacing
fossil fuel burners with PyroGenesis’ proprietary plasma torches),
and/or (ii) propose plasma-based solutions to existing
problems.
______________________1 https://www.nbcnews.com/politics/white-house/biden-will-commit-halving-u-s-emissions-2030-part-paris-n1264892 2
https://www.bioenergy-news.com/news/rng-included-in-quebec-governments-green-economy-plans/
Q2. Can you describe the advantage of
this transaction for PyroGenesis’ shareholders?
A. Sure.
AST not only faced the natural growing pains of
an emerging company, such as access to capital to support growth,
but they were also challenged during COVID due to delayed payments
and supply chain issues, all at a time of increasing demand for
their products.
We believe PyroGenesis’ acquisition of AST will
now allow AST, under PyroGenesis, to realize its full potential by
providing the requisite skill set and assets to grow and meet
future demand. We expect that AST’s growth will be accelerated with
access to PyroGenesis’ (i) solid quality management system,
including ISO 9001 certification; (ii) multidisciplinary team of
engineers (including process, mechanical and electrical
engineering) and modeling capabilities (CFD, 3D mechanical, FEM
analysis, process modeling); (iii) expertise in maximizing
intellectual property through a robust patent strategy; (iv) newly
upgraded state-of-the art fabrication and warehousing facility
allowing for quick turnaround of equipment and parts to customers;
and (v) a track record of over 30 years history of doing business
with a long list of high-profile customers.
In discussions with clients during our due
diligence, we confirmed that any existing issues were entirely
manageable and there was clear interest to expand the relationship
under PyroGenesis ownership.
In summary, we have acquired AST for approx.
$4.4MM, which is to be paid upon the accomplishment of certain
milestones, each of which further validates and confirms AST’s
position in the marketplace. AST has a healthy backlog of over
$10MM of signed contracts, a pipeline of approx. $15MM (weighted
probability of approx. $8MM), receivables of approx. $5MM and debt
of approx. $2MM (the majority of which is expected to paid by
December 31, 2021 from AST’s cashflow).
Q3. Are they any less obvious hidden
gems within this acquisition?
A. Yes, in fact there is.
We believe that one of AST’s offerings is
ideally suited to significantly increase the value of one of our
land-based environmental offerings. The syngas produced by
PyroGenesis in, for example, its PRRS offering is quite similar to
the Coke Oven Gas (“COG”) that is cleaned and upgraded by AST. In
PyroGenesis’ case, the syngas is converted into electricity and
heat which are both low value products. In AST’s case, the COG is
purified, and hydrogen, which has a much higher value, is extracted
from it. As such, there is an opportunity to repurpose the syngas
generated by PyroGenesis’ PRRS offering by leveraging off of AST’s
technology, and thereby create higher value products such as
hydrogen, methanol and ethanol, and effectively increasing the
market value of PyroGenesis’ PRRS offering.
Q4. What are your expectations over the
next 12 - 18 months?
A. Our goal is to strengthen
AST’s operations, quality control systems, and increase the backlog
of signed contracts, all while delivering on existing contracts. As
this is completed over the next 12 to 18 months, we will
continually evaluate our options to accelerate the rollout of these
solutions in order to address the significant unmet need in the
market.
We also fully expect in the fullness of time,
and once PyroGenesis’ engineering team becomes more familiar with
AST’s processes, significant IP could be developed.
About PyroGenesis Canada
Inc.
PyroGenesis Canada Inc., a high-tech company, is
a leader in the design, development, manufacture and
commercialization of advanced plasma processes and sustainable
solutions which reduce greenhouse gases (GHG), and are economically
attractive alternatives to conventional “dirty” processes.
PyroGenesis has created proprietary, patented and advanced plasma
technologies that are being vetted and adopted by multiple
multibillion dollar industry leaders in four massive markets: iron
ore pelletization, aluminum, waste management, and additive
manufacturing. With a team of experienced engineers, scientists and
technicians working out of its Montreal office, and its 3,800 m2
and 2,940 m2 manufacturing facilities, PyroGenesis maintains its
competitive advantage by remaining at the forefront of technology
development and commercialization. The operations are ISO
9001:2015 and AS9100D certified, having been ISO certified since
1997. For more information, please visit: www.pyrogenesis.com.
This press release contains certain
forward-looking statements, including, without limitation,
statements containing the words "may", "plan", "will", "estimate",
"continue", "anticipate", "intend", "expect", "in the process" and
other similar expressions which constitute "forward- looking
information" within the meaning of applicable securities laws.
Forward-looking statements reflect the Corporation's current
expectation and assumptions and are subject to a number of risks
and uncertainties that could cause actual results to differ
materially from those anticipated. These forward-looking statements
involve risks and uncertainties including, but not limited to, our
expectations regarding the acceptance of our products by the
market, our strategy to develop new products and enhance the
capabilities of existing products, our strategy with respect to
research and development, the impact of competitive products and
pricing, new product development, and uncertainties related to the
regulatory approval process. Such statements reflect the current
views of the Corporation with respect to future events and are
subject to certain risks and uncertainties and other risks detailed
from time-to-time in the Corporation's ongoing filings with the
securities regulatory authorities, which filings can be found at
www.sedar.com, or at www.sec.gov. Actual results, events, and
performance may differ materially. Readers are cautioned not to
place undue reliance on these forward-looking statements. The
Corporation undertakes no obligation to publicly update or revise
any forward- looking statements either as a result of new
information, future events or otherwise, except as required by
applicable securities laws. Neither the Toronto Stock Exchange, its
Regulation Services Provider (as that term is defined in the
policies of the Toronto Stock Exchange) nor the NASDAQ Stock
Market, LLC accepts responsibility for the adequacy or accuracy of
this press release.
SOURCE PyroGenesis Canada Inc.
For further information please contact: Rodayna
Kafal, Vice President, IR/Comms. and Strategic BDPhone: (514)
937-0002, E-mail: ir@pyrogenesis.com
RELATED LINK: http://www.pyrogenesis.com/
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