Integumen License Ageement

Integumen License Ageement

Joining forces with Integumen for sales of Omega 3 and bioplastics

Today, Cellulac announces that it has signed Heads of Terms to enter into a commercial technology agreement with Integumen (LSE: SKIN). In addition, Integumen has conditionally agreed to acquire 9.35% of the issued shares of Cellulac. Gerard Brandon and Camillus Glover, Chief Executive Officer and Chief of Operations of Cellulac respectively, will join the Board of Integumen and take up management in parallel roles to those held in Cellulac.

Gerard Brandon (Chairman & CEO of Cellulac) commented:

“Cellulac has novel technology and IP with commercial traction. The marriage of this technology and Integumen’s consumer presence online and in other retailers will create a supply source to customer supply chain of natural oils and biodegradable plastic ingredients to a number of sectors.

The environmental impact of single-use plastics is well documented and increasing awareness of the harm it is causing to our planet has driven governments, companies, and individuals to abandon the use of these materials and seek alternative solutions. We believe we are strongly placed to provide an effective and more eco-friendly solution.”

Tony Richardson (Chairman of Integumen) commented:

“The Board acknowledges the challenges Integumen has faced in generating returns for shareholders. We have been working hard to identify the best route forward and we believe acquiring a stake in Cellulac presents a number of opportunities to accelerate revenue generation. The economic and environmental drivers of biodegradable plastics are compelling driven by the global attitudinal shift against single-use plastics, creating strong potential demand for Cellulac’s products. We believe the actions we are taking will position us well for the future.

The wealth of experience and expertise that Gerard Brandon and Camillus Glover bring to their respective new roles of Chief Executive Officer and Chief Operations Officer at Integumen, I believe, will see accelerated growth across the business.”

Full details of the announcement can be seen on the London Stock Exchange website here

Integumen License Ageement

Integumen License Ageement

Today, Cellulac announces that it has signed Heads of Terms to enter into a commercial technology agreement with Integumen (LSE: SKIN). In addition, Integumen has conditionally agreed to acquire 9.35% of the issued shares of Cellulac. Gerard Brandon and Camillus...

What are you doing about ocean pollution?

What are you doing about ocean pollution?

  To many people watching Sky News and their #OceanFree Campaign, you would think that removing plastic from the oceans will be enough to resolve the problem. Sadly, this is not the case.   The oceans ability to provide food from fisheries and aquaculture is...

Biomassive Revolution

Biomassive Revolution

  It's just not your fault   What if I were to tell you that it is not your fault that the seas are polluted with plastic that the fish and whales are consuming? In the same way, I can say that it is not your fault that over-fishing is destroying future fish...

Daring to Dream Big

Daring to Dream Big

The definition of insanity is doing the same thing over and over again and expecting a different result - Albert Einstein   Another 300 million tonnes of plastic every year Since World War II we have consumed 5 billion tonnes of plastic, much of which has ended...

Cellulac Signs Head of Terms Reverse Takeover Integumen plc

Cellulac Signs Head of Terms Reverse Takeover Integumen plc

Proposed transaction set to transform bioplastic and bio-based oil
production, from farm to the consumer food and cosmetic industries

London, UK, 16th April 2018:

Integumen plc (AIM: SKIN) announced today that it has conditionally agreed to acquire Cellulac PLC (“Cellulac”) in an all share transaction, subject to a number of conditions ,including due diligence and the approval of both Integumen’s and Cellulac’s shareholders. The full announcement can be found below.

Integumen proposes to acquire the entire issued and to be issued share capital of Cellulac. The consideration will comprise such number of new ordinary shares in Integumen (“Consideration Shares”) as will represent approximately 84% of the issued share capital, as enlarged by the Consideration Shares only. In addition, Integumen intends to raise up to £7.5 million by way of an equity placing and/or debt funding.

On completion, it is proposed that Integumen will change its name to Cellulac plc and that the shares in enlarged group will be admitted to trading on AIM.

Cellulac is at the forefront of the biodegradable plastic revolution. Integumen’s existing personal care business products offer “direct to consumer” access, transforming single-use plastic packaging to Cellulac’s biodegradable green solution.

  • 8 million tonnes of plastic are dumped into the seas every year.
  • By 2050 the weight of plastic will equal the weight of the fish left in the oceans.
  • Government minds are focused on finding a solution because China has refused to take any more of the world’s rubbish since 2017.
  • Until recently Ireland shipped 95% of its plastics to China.
  • Britain’s plastic recycling has dropped because China won’t take it anymore.

Today’s announcement is an important step towards realising the Company’s vision of taking on society’s dirty little secret – plastic pollution. – Gerard Brandon, CEO of Cellulac

Contact:
Gerard Brandon +353 85 109 1457
Email: gjbrandon@cellulac.com

16 April 2018
THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

LEI: 213800M477RQVVHVUD72

Integumen plc

(“Integumen” or the “Company”)

Proposed Acquisition and Trading Update

Integumen (LSE: SKIN) announces that it has conditionally agreed to acquire Cellulac PLC (“Cellulac”) in an all share transaction, subject to, inter alia, due diligence and the approval of both Integumen’s and Cellulac’s shareholders (the “Proposed Acquisition”). Cellulac has developed, acquired and integrated technologies to produce biodegradable plastic components for consumer packaging, natural oils and nutritional food ingredients for use in the cosmetics, nutritional food and health care sectors. The Proposed Acquisition will enable Integumen to enter the highly attractive bio-materials and nutritional food sector complementing its existing personal care businesses.

The enlarged group will focus on biodegradable plastic ingredients, cosmetics and human grade food supplements and will have a portfolio of existing products, with high-margins in the oral care, medical and cosmetic industries. Existing Integumen cosmetic packaging, oral care consumer products and third party products can in time be replaced with biodegradable plastic materials. These drop-in replacements will be focused on existing and near to market products. Demand for these products is established and an offtake agreement worth up to $36m over five years is already in place.

The Board of Integumen believes that the Proposed Acquisition has a compelling strategic and financial rational as it will:

  • enable the enlarged group to focus on biodegradable plastic ingredients, cosmetics and human grade food supplements, complementing Integumen’s existing personal care businesses driving growth through innovative products and technology;
  • diversify and create opportunities to increase revenue streams;
  • create an enlarged group that will focus on human grade food supplements and cosmetics and will have a portfolio of existing products, with high-margins in the oral-care, medical and cosmetic industries;
  • allow the enlarged group to capitalise on the shifting opinion around single use plastics amongst consumers and policy makers by fulfilling demand for products with biodegradable plastic packaging. Existing Group cosmetic packaging, oral care consumer products and third party products can in time be replaced with biodegradable plastic materials and these replacements will be focused on existing and near to commercialised products;
  • provide significant market opportunities due to complementary business activities; and
  • bring a strong well-established management team to the enlarged group.

Integumen proposes to acquire the entire issued and to be issued share capital of Cellulac. The consideration will comprise such number of new ordinary shares in Integumen (“Consideration Shares”) as will represent approximately 84% of the issued share capital, as enlarged by the Consideration Shares only. In addition, Integumen intends to raise up to £7.5 million by way of an equity placing and/or debt funding (the “Fundraising”).

The Proposed Acquisition would constitute a reverse takeover for Integumen under Rule 14 of the AIM Rules for Companies (the “AIM Rules”) and under the City Code on Takeovers and Mergers (“Code”). Accordingly, under the AIM Rules the Proposed Transaction is subject to the publication of an admission document and approval by Integumen’s shareholders.

In accordance with Rule 14 of the AIM Rules, the Company’s ordinary shares will be suspended from trading on AIM with effect from 7:30 a.m. today. The Company’s ordinary shares will remain suspended until such time as either an admission document is published, or an announcement is released confirming that the Proposed Acquisition is not proceeding. The Company will update its shareholders as and when appropriate.

Cellulac is a public company with 35 shareholders and, although its shares are not traded on any exchange, it is currently also subject to the Code. However, a non-waivable condition of the Proposed Transaction is that Cellulac will re-register as a private company, at which point it will cease to be subject to the Code. Further details regarding the proposed re-registration of Cellulac as a private company and the operation of the Code are provided below.

The Proposed Acquisition will be subject to a number of further conditions, including, inter alia, completion of satisfactory due diligence, amendments to Cellulac’s convertible debt, the entering into and completion of a share purchase agreement, publication of an AIM admission document, the grant of a waiver by the Panel in connection with a Whitewash (as detailed further below), approval of both Integumen’s and Cellulac’s shareholders, and the Fundraising.

In conjunction with the admission of Integumen’s enlarged share capital to trading on AIM (“Admission”), the Company intends to perform a consolidation of its ordinary shares and change the name of the Company to Cellulac plc.

Information on Cellulac

Cellulac is a vertically integrated group of companies with operations in Ireland and with headquarters in the United Kingdom. Activities undertaken by these companies range from the production of biodegradable plastic ingredients and natural oils to expertise in consumer marketing in cosmetics, food and health care industries. The production division capabilities include process engineering, chemical engineering, biochemistry and polymer science.

Cellulac has scaled from 10-litre Omega 3, laboratory scale in 2009 to pilot-scale of 1,000 litres in 2014. This was further expanded up to 10,000 litres in 2015 before moving to commercial scale of 80,000 litres in 2016.

Commercial scale batches of Omega 3 oil for human consumption, resulted in operational savings of 25% over conventional Omega 3 production methods. Regulatory approvals were sought and received for the sale of the product in the European Union and the United States.

Cellulac’s website address is www.cellulac.com.

Proposed changes to the board of directors of Integumen (the “Board”)

Upon Admission, it is proposed that Gerard Brandon and Camillus Glover, who are, respectively, the current Chief Executive Officer and Chief Operations Officer of Cellulac, will join the Board as (I) Chief Executive Officer and (II) Chief Operations Officer, respectively. It is proposed that Chris Bell, the current Chief Financial Officer of the Company, will remain as an executive director upon Admission. It is further proposed that an additional two non-executive directors will be appointed to the Board. In light of the above, Declan Service has resigned from the Board with immediate effect and Chris Bell has agreed to act as interim Chief Executive Officer of the Company.

Trading Update

On 22 December 2017, the Board of Integumen outlined its commitment to review the product portfolio with a view to setting commercialisation priorities for 2018 and beyond. After considering a number of options the Board determined that it needed to expand its revenue generating activities through product acquisitions to enhance its higher margin oral care, skincare and personal care business and leverage its cost base more effectively.

Consequently, pending completion of the Proposed Acquisition and the Fundraising, the Board has decided to continue the promotion of the more significant revenue generating technologies, in the expectation that they have the earliest potential for positive cash-flow. To support this, the Board has approved a cost reduction and cost deferral programme amounting to a saving of approximately £40,000 a month across other areas of the business and corporate overheads. In addition the Company is in the process of undertaking a small debt or equity raise, in association with Cellulac, to pay ongoing transaction costs and increase its financial resources while the transaction progresses.

Stoer, the male cosmetics brand, has been progressing sales from existing inventory acquired as part of its acquisition, via new online outlets. Pending further funding, development activities beyond existing products at Visible Youth and Clarogel have been reduced, contract discussions with Champion Shave deferred and emphasis is now targeted on maintaining the Company’s patent and trademark portfolio.

The Code

The Code currently applies to each of Integumen and Cellulac.

Compliance with the Code

As the Proposed Acquisition is conditional upon the re-registration of Cellulac as a private company, upon which the Code would cease to apply to Cellulac, the Proposed Acquisition will not comply with the Code.

Rule 9

The shareholders in Cellulac (the “Selling Shareholders”) are presumed to be acting in concert for the purposes of the Code and, if the Proposed Acquisition proceeds, it is likely that they will together acquire more than 50% of the voting rights in the enlarged share capital of Integumen which, without a waiver of the obligations under Rule 9 of the Code (commonly referred to as a “Whitewash”), would oblige the Selling Shareholders (and any persons acting in concert with them) to make a general offer to Integumen Shareholders under Rule 9 of the Code (a “Rule 9 Offer”). Consequently, the Proposed Acquisition is conditional upon the grant of a waiver by the Panel of such a waiver and the approval of such a waiver by at least 50% of independent shareholders in Integumen voting on a poll at a general meeting.

Re-registration of Cellulac as a private company

A condition to the Proposed Acquisition is that Cellulac is first re-registered as a private company. Accordingly, Cellulac will issue a circular to its shareholders setting out the background to and reasons for the re-registration and calling a general meeting at which its shareholders will be asked to approve the re-registration (the “Re-registration Circular”). If Cellulac shareholders do not approve the re-registration of Cellulac as a private company, the Proposed Acquisition will not proceed and Cellulac will remain a public company.

The Code currently applies to Cellulac. If Cellulac is re-registered as a private company, the Code will cease to apply.

Cellulac shareholders should note that, if the resolution to re-register Cellulac as a private company becomes effective, they will not receive the protections afforded by the Code in the event that there is a subsequent offer to acquire their Cellulac shares.

The Re-registration Circular is expected to be published in the next few weeks and, as well as setting out the background to and reasons for the re-registration and calling a general meeting at which its shareholders will be asked to approve the re-registration, it will include an explanation of the Code and the protections that Cellulac shareholders will be giving up if the re-registration becomes effective.

Brief details of the Code and the protections given by the Code are described below. Before giving consent to the re-registration of Cellulac as a private company, Cellulac shareholders may want to take independent professional advice from an appropriate independent financial adviser.

The Code
The Code is issued and administered by the Panel. Cellulac is a company to which the Code applies and its shareholders are accordingly entitled to the protections afforded by the Code.

The Code and the Panel operate principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment by an offeror. The Code also provides an orderly framework within which takeovers are conducted. In addition, it is designed to promote, in conjunction with other regulatory regimes, the integrity of the financial markets.

The General Principles and Rules of the Code

The Code is based upon a number of General Principles which are essentially statements of standards of commercial behaviour. These General Principles are set out in Part 1 of Appendix B. The General Principles apply to all transactions with which the Code is concerned. They are expressed in broad general terms and the Code does not define the precise extent of, or the limitations on, their application. They are applied by the Panel in accordance with their spirit to achieve their underlying purpose.

In addition to the General Principles, the Code contains a series of Rules, of which some are effectively expansions of the General Principles and examples of their application and others are provisions governing specific aspects of takeover procedure. Although most of the Rules are expressed in more detailed language than the General Principles, they are not framed in technical language and, like the General Principles, are to be interpreted to achieve their underlying purpose. Therefore, their spirit must be observed as well as their letter. The Panel may derogate or grant a waiver to a person from the application of a Rule in certain circumstances.

This announcement is made with the agreement of Cellulac.

Further announcements will be made as and when appropriate.

Announcements made by Cellulac in connection with the Proposed Acquisition will be made on its website at www.cellulac.com.

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on Integumen’s website at www.integumenplc.com and on Cellulac’s website at www.cellulac.com. The content of the websites referred to in this announcement is not incorporated into and does not form part of this announcement.

Tony Richardson, Chair

+ 353 (0) 87 770 5506

(Nominated Adviser)
Neil Baldwin/Andrew Emmott
+44 (0) 113 370 8974

Claire Noyce
+44 (0) 203 764 2341

Ben Turner/James Pope
+44 (0) 20 3621 4120

Shan Shan Willenbrock
Joe McGregor
+44 (0) 20 7930 0777
integumen@tbcardew.com

Biomassive Revolution

Biomassive Revolution

Biomassive Revolution

If you want to solve plastic ocean pollution reduce CO2 and reduce over-fishing only a Revolution will achieve it

 

It’s just not your fault

 

What if I were to tell you that it is not your fault that the seas are polluted with plastic that the fish and whales are consuming? In the same way, I can say that it is not your fault that over-fishing is destroying future fish stocks. It is absolutely not your fault that climate-change is reeking havoc on the low-lying seashores affected by monster storms. That over-whelming burden is far too much responsibility to bear on a single individual.

 

Why did this happen?

 

No one saw it coming.

 

Because, as a society, we are only guilty of not being psychic.

 

A member of my family a few weeks ago was going through a crisis. I could have said “Don’t worry. It will all work out“. The crisis was already out of control and was not brought on by anything that person did. It was a situation that could have happened to anyone, at any time. It could have been avoided…

 

…if that person was psychic.

 

It would have been easy to comment on how they should feel, or say “Don’t be afraid“. Instead, I told that person that she was not alone. We walked through the crisis together. From the 2016 movie “Finding Dory

 

When life gets you down, you know what you gotta do? Just keep swimming.” — Dory

 

3 Secrets you already know about Industry.

 

  • Secret #1: Industry, all by itself, are not able to and will not stop producing 300 millions tonnes of plastic every year.
  • Secret #2: Industry, all by itself, are not able to and won’t stop overfishing and destroying the oceans for Omega 3 oil production; and,
  • Secret #3: Industry, all by itself, are not able to and can’t reduce CO2 or greenhouse gas emissions increasing all by themselves.

 

Biomassive Revolution

 

Only a Revolution from the Biological Masses is going to make a difference. Just like in 1989 when the Berlin wall came down. It did so with individuals bare hands, working together. There were no cranes or bulldozers. Of course, once it started, the industrial complex got behind it. But initially, it was done by the people.

 

This company is part of the industrial complex. Just like every other producer, we contribute greenhouse gases and CO2. Our equipment is installed in many companies across many industrial sectors. So while we play a role in climate change, as CEO I am saying that we can and will also play our role in the solution. There is a realization, that in order to reduce plastic in the oceans and replace it with biodegradable substitutes, the industrial complex has to step up to the plate. Industry too can replace oils that are currently extracted from fish, and make it from sustainable biomass.

 

One by one we must tear down the high wall of resistance until there is a crowd, then a tribe and eventually a revolutionary wave that will make a difference. Industry alone, will not be found wanting, but they will not lead the way.

 

To begin, join the Facebook Page of the Biomassive Revolution. Call out the polluters. Highlight the positive solutions and resolve that it is not just enough to make a change alone, but to make a difference, together.

 

Like this post or hate it? Let me know. Leave a comment below, and share it, but first join the Revolution.

Back to HomepageFacebook Group
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Integumen License Ageement

Today, Cellulac announces that it has signed Heads of Terms to enter into a commercial technology agreement with Integumen (LSE: SKIN). In addition, Integumen has conditionally agreed to acquire 9.35% of the issued shares of Cellulac. Gerard Brandon and Camillus...

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Daring to Dream Big

Daring to Dream Big

Daring to Dream Big

The definition of insanity is doing the same thing over and over again and expecting a different result – Albert Einstein

 

Another 300 million tonnes of plastic every year

Since World War II we have consumed 5 billion tonnes of plastic, much of which has ended up in a landfill or the oceans.

Making ourselves healthier by depleting global fish stocks.

In 2015, a consensus of expert opinion suggested that a recommended minimum daily dose of 500mg the Omega 3 oil requirement for the world population was 1.3 million metric tonnes. The world fish catch is not elastic and we are already at a plateau. Thankfully we are still producing much less than that each year, but demand continues to grow, while fish stocks continue to be depleted.

 

Daring to think big enough to have an effect

 

In 2009 Patrick Walsh was a Professor at the National University of Galway, Ireland, had a vision of reducing the amount of energy in the production of biodegradable plastic. This biodegradable plastic ingredient is lactic acid. Used as a food preservative, curing agent, and flavoring agent. It is also an ingredient in processed foods and is used as a decontaminant during meat processing.

 

When broken down from poly-lactic acid, the lactic acid derived bio-plastic ingredient converts back to CO2 and water.

 

Humble, or destitute beginnings

 

By 2012 this small company, now named Cellulac, was €300,000 in debt but had secured €2.8m of EU grants for a pilot plant, with the conditions for the release of the grant be, that industry and investors had to contribute a further €9m.

 

New management was brought in. Even with the vision and the size of EU grant, finding €9 million for a pilot plant, that was never going to break-even, let alone be profitable, was equally never going to be built.

 

The team, which came from a previously successful company, Alltracel Pharmaceuticals, altered the direction and mission to address the glaring lack of infrastructure needed to commercialize the technology.

 

  • 25% of the solution, the Bacteria, was in place. Bacteria are easier to explain if I use the term Gremlins. Remember the movies from 1984 and 1990? If you spilled water on them, they multiplied. Just like Gremlins, Lactic Acid and Micro-algae multiply in water. They are incidentally, produced in separate tanks.
  • 25% was an industrial scale engineering solution. There was a need to punch the living daylights out of the Gremlin-like bacteria and micro-algae to begin the release of oils and bio-plastic ingredients into a soup-like mixture.
  • 25% was a low-cost recovery method. Enzymes are like the 80’s video game of Pac-Man. They consume the ghosts of the Gremlins shell to release the oils and lactic acid.
  • The last 25% was a requirement for a production facility that would deliver commercial scale production of the bio-plastic ingredient and Omega-3 oils.

 

Pulling the pieces together

 

In July of 2013, Cellulac reached the 50% milestone when it acquired the SoniqueFlo technology from Pursuit Dynamics (PDX).

 

If you know the history of PDX, you are probably thinking, why buy the failed PDX. Right? They had blown through £68 million GBP.

 

Well, for Cellulac, this was the equivalent of being handed the engineering equivalent of Pfizers side-effect for their heart treatment, turned erectile dysfunctional drug, Viagra.

 

SoniqueFlo was designed as an efficient heater that softened up grains before food, ethanol and beer production. The same technology worked 10 times better at smashing up softer cells on the recovery, or end, stage of oil and bio-plastic ingredient production.

 

It was like having millions of mini-Conor McGregors compressed into each SoniqueFlo reactor punching the oils and bio-plastic ingredient out of the Gremlin Bacteria and Micro-algae, preparing them for the final stage.

 

The beauty of this industrial scale solution is that it was already operationally successful in 25 production facilities across the food, bio-fuel and alcohol industries since 2010.

 

Later in 2013, Cellulac reached the 75% milestone when it secured access to the 2nd largest brewery in Ireland. This had the output equal to 100 times the size of the original pilot plant that had been the subject of the EU Grant in 2012. It was the former Diageo, Harp Lager production plant in Dundalk, Ireland. A state-of-the-art facility, fully automated, food and beverage grade facility.

 

The 100% milestone was reached faster than expected in 2015, with the acquisition of Aer-Bio. This was a small Enzyme expression protocol company. They specialized in the recovery of oils from micro-algae and production of Omega-3 using Enzymes (these are Pac-Man-like proteins that consume the outer layers of cells which have oil inside).

 

Cellulac had worked with Aer-Bio on a combination of SoniqueFlo and Enzymes since early 2014 to deliver a solvent-free production process for Omega-3 oils.

 

Proven Commercial Scale Production

 

In 2016, at a UK industry partner site, the conversion from a conventional solvent-based process to a solvent-free process was responsible for an 81% reduction of the downstream recovery cost of Omega-3 oils.

 

The outcome is a commercial scale solvent-free production process with sales of Omega-3 to one of the largest food ingredient companies in the world.

 

By 2017, Cellulac has achieved 3 out of these 4 stages:

 

  • Laboratory
  • Third-party pilot facility in Potsdam, DE. 1 x 1,000 litre vessel
  • Industry Partner commercial scale in Liverpool, UK. 6-Tonne per batch from one 80,000 litre vessel.
  • Cellulac production site, Dundalk, IE. 10 x 100,000 litre vessels and 10 x 400,000 litre vessels.There is a lot more going on and you can expect some major news before the end of this year.

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Integumen License Ageement

Today, Cellulac announces that it has signed Heads of Terms to enter into a commercial technology agreement with Integumen (LSE: SKIN). In addition, Integumen has conditionally agreed to acquire 9.35% of the issued shares of Cellulac. Gerard Brandon and Camillus...

What are you doing about ocean pollution?

  To many people watching Sky News and their #OceanFree Campaign, you would think that removing plastic from the oceans will be enough to resolve the problem. Sadly, this is not the case.   The oceans ability to provide food from fisheries and aquaculture is...

Biomassive Revolution

  It's just not your fault   What if I were to tell you that it is not your fault that the seas are polluted with plastic that the fish and whales are consuming? In the same way, I can say that it is not your fault that over-fishing is destroying future fish...

Daring to Dream Big

The definition of insanity is doing the same thing over and over again and expecting a different result - Albert Einstein   Another 300 million tonnes of plastic every year Since World War II we have consumed 5 billion tonnes of plastic, much of which has ended...

Corny Problem for EU Sugar Producers

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  In a recent major MIT Study (Covert, Thomas, Michael Greenstone, and Christopher R. Knittel. 2016. "Will We Ever Stop Using Fossil Fuels?" Journal of Economic Perspectives, 30(1): 117-38. ) it was shown that approximately 65 percent of global greenhouse gas...

Butterfly Effect of Oil Price on Renewables

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Cellulac Formally Requests Metabolix Shareholders to Consider Merger Proposal

Cellulac Formally Requests Metabolix Shareholders to Consider Merger Proposal

Cellulac Formally Requests Metabolix Shareholders to Consider Merger

Cellulac merger proposal to Metabolix worth $40m in assets and offtake agreement of $38m rejected in favor of closing biopolymer business and spending $35m over 7 years on crop science project with no revenue.

 

DEAR METABOLIX SHAREHOLDERS

 

me

London, UK. 25th July, 2016: Cellulac plc (@cellulac), is an industrial biochemicals investment technology company. Cellulac have been interested in Metabolix Inc., ($MBLX) for some time and after their announcement, in May 2016, of a strategic review, Cellulac made a formal proposal via the CEO to merge both companies. The proposal meant Cellulac would contribute industrial scale production assets with biochemical and biopolymer capacity, independently valued at up to $40m. In addition, terms for a manufacturers licensing agreement of the combined Metabolix and Cellulac biopolymer assets with access to debt and equity funding from Cellulac assets and shareholders for a commercially focused growth strategy of the enlarged entity.

 

The Board of Directors of Metabolix decided the $40m merger offer was not important enough to inform shareholders

 

A merger with Cellulac, based on the biopolymer intellectual property and associated institutional knowledge, would reduce Metabolix development overhead to a more manageable level where manufacturing license fees and future royalties would transform Metabolix, for the first time in 24 years, into a profitable part of an enlarged bio-based company. Synergies would contribute shared management and development costs across a larger corporate group, multiple revenue streams comprising of production equipment installations, recurring revenue from biochemical production, manufacturing product licensing agreements, process licensing with biopolymer offtake agreements worth $38m already in place.

 

Right up to July 2016, Metabolix continued to burn $2m a month. This was no surprise considering the content of the presentation at the Roth Investor Conference on the 15th March 2016 and reiterated in the year-end report later that month.

 

March 29th Metabolix conference call to investors the CEO stated:

 

“Looking ahead the company is turning its attention to the next step, moving from commercial pilot-scale operations to a commercial-scale specialties business”.

 

Yet within 7 weeks Metabolix had sold the exclusive global rights and future royalties on PHA use in medical devices for the price of less than one month’s burn rate.

 

Astonishingly, after wasting 2 months and what appears to be a further $4m in costs, the Metabolix Board declined the Cellulac merger offer.

 

The Board of Metabolix has been responsible for:

 

  1. The supervision, over 24 years, of $326m invested by shareholders in biopolymer research and development
  2. Appointing the current CEO in January 2014
  3. Raising and overseeing the current CEO spend $40m on the biopolymer business
  4. Presiding over an 89% drop in shareholder value in the last 30 months; and
  5. A 99% drop from all-time high
The same Board has now decided to:

 

  1. Write off the entire biopolymer business
  2. Dismiss 48 people relating to the biopolymer business
  3. Pursue a path of further shareholder value destruction in questionable scientific research for the next 7 years as a public company.
In a written note a former Metabolix Senior Scientist said:

 

In the case of PHA producing plants the PHA content in one leaf could not represent the low overall content of PHA in the biomass. Many public presentations were not telling the exact picture, but rather the ‘nice numbers’. As a scientist I always challenged this phenomena. The plant project today is on the table for rapid growing biomass. But knowing the rate limiting factors in growing plants it will not solve the world problems…

Cellulac Core Terms

 

  1. Cellulac merge on a 50/50% share for share basis with Metabolix
  2. The immediate cessation of the current business model of Metabolix avoiding further unnecessary expenditure
  3. The restructuring/divestment of the high R&D overhead and associated costs of Metabolix
  4. The business model focused on the commercial activities at the core of Cellulac technology
  5. Metabolix is renamed Cellulac to indicate a change of business model away from the R&D to a commercially focused Company
Questions for the Board

 

 

I have three questions for the Metabolix Board of directors:

 

  1. Why did you decline a merger proposal, without informing shareholders, valuing Metabolix in excess of $35m offering industrial scale biochemical and future biopolymer production capacity, access to asset backed debt and equity funding for commercial growth delivering multiple revenue streams from a combined technology platform that would make Metabolix a profitable contributor of the enlarged corporate entity?
  2. Was there a Board decision in May 2016 to close the biopolymer business when the Board signed off on the sale of patents for the exclusive global use of PHA in the high margin medical device sector for $2m, and if so, why was management allowed to burn through another $4m until the end of July 2016?
  3. Why are you willing to subject shareholders to 7 more years of equity value destruction by dilution, at $5m costs a year, with no foreseeable revenues, in an early stage research and development project, other than for survival with access to government grants?
In Closing

 

 

In my opinion, by declining the offer from Cellulac, current management and Metabolix Board demonstrate a complete lack of business acumen or commercial vision. Displaying utter contempt for shareholder value they are adopting a strategy that requires investment of $35m over the next 7 years leading to further destruction in equity value with no visibility of revenue, other than government grants.

 

It is incumbent upon the Board members, but especially Independent Directors, majority and minority shareholders to immediately review the reasons for this illogical decision and become vocal about Cellulacs’ offer that adds $40m in biochemical and biopolymer assets for commercial scale production and manufacturer licensing and offtake agreements. This is likely to be the last opportunity to transform Metabolix, a 24 year loss making company, into part of a high growth enlarged group with multiple revenue streams for biochemicals and biopolymers, which would be cash generative this year.

Gerard Brandon
Chief Executive

 

Address

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Finsgate, 5-7 Cranwood Street, London EC1V 9LH

Call us from UK +44 (122) 392 6660

Call us from US +1 (310) 421 2910

NOTES TO EDITORS:

 

Cellulac is an industrial biochemicals investment technology company that collaborates with, and acquires, companies to exploit the combined production, intellectual property assets and institutional knowledge. We out-license non-core technology and expertise in exclusive and non-exclusive agreements, while at the same time, developing and extracting maximum value from the remaining core production and intellectual property assets that we acquire.

 

We seek to identify enzyme, bacteria, chemical process, fluid dynamic, electrical and software engineering efficiency opportunities within the bio-industrial technology sector that offer management synergies and hybrid integration and value added benefits to our existing technology platform. Such various technology combinations deliver valuable additions to production processes, improving margins and reducing costs in the bio-fuel and bio-chemical sector.

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Valuable nuggets of gold can be found in this failed development Cellulosic Ethanol gold-rush and across the industrial biochemical industry. When pieced together as a total solution they offer the greatest financial incentive, and potential opportunity, to convert by-products of the $24bn ethanol production industry. This low margin commodity industry has the regulatory backing of the US Government (RFS) along with Federal and State Tax (LCFS) support. It is an industry desperate to reform into a high corn crush marginal return.

 

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Industry participants have been getting financial support from government and pioneering investors. Failures have come on the back of MBA style case studies from managements doing things right. Success going forward lies, not just in doing things right, but doing the right thing by converting the unexploited by-product value that lies within the ethanol industry by building on the foundations of what remains failed, scaled, Cellulosic ethanol aspirations.

 

Gerard Brandon is CEO of Cellulac a company who have collaborated and acquired companies with intellectual property derived specifically from the biofuel and biochemical industry. By entering into exclusive and non-exclusive technology license agreements from the acquired non-core technology, Cellulac has been able to focus on the commercial development of the technology and management synergies. The mission is to extract maximum value from the remaining core production and intellectual property assets that are acquired.

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