Accsys finalizes investment in $136mn Accoya production facility in USA

Accsys finalizes investment in $136mn Accoya production facility in USA

AMSTERDAM: Accsys, the fast-growing and eco-friendly company that combines chemistry and technology to create sustainable wood building products, has concluded a final investment decision to construct and operate a new Accoya production facility in the USA, a statement noted.

Final Investment Decision

Accsys and Eastman Chemical Company have completed the remaining planning workstreams required and made the final investment decision to proceed with the construction of the US facility.

Furthermore, all key commercial agreements, including bank loans totalling US$80 million, are now in place. Construction preparations have commenced, and workers are due to start site mobilisation in the coming days for Accoya USA, LLC, the previously announced joint venture (JV) of Accsys and Eastman.

Strategic Benefits

The JV will construct the plant with an initial capacity of approximately 43,000 cubic metres per annum, strategically located at Eastman’s Kingsport, Tennessee site.

The Project will replicate existing Accoya technology at Accsys’ Arnhem production facility. North America represents a substantial market opportunity for Accoya and a growth acceleration opportunity for Accsys. Accsys has established strong foundations in North America with significant customer demand for Accoya.

Accoya supply is currently constrained by production capacity at its existing Arnhem plant and requires transatlantic transportation.

The strategic rationale for the Accoya USA JV and construction of the facility remains in line with that set out in the Company’s announcement on 5 May 2021, and the target financial returns remain valid with an expected targeted IRR of over 20%.

Engineering work has already commenced and orders for key long lead-time equipment including the Accoya acetylation reactors have been placed.

Groundworks to facilitate the start of construction are expected to commence shortly. The facility is expected to take up to approximately two years to construct. Following construction, Accsys expects sales to ramp up to full capacity within three years.

Project Funding

The total construction and start-up costs for the facility, including for the initial two reactors, are expected to be approximately US$136 million. As previously announced, under the JV, Accsys holds a 60% interest and Eastman a 40% interest.

$66 million of the total project cost will be funded by equity contributions from the JV parties. Accsys’ pro-rata share of US$39.6 million (€34.9 million) will be funded from Accsys’ existing cash and debt facilities.

This includes funds raised by Accsys in May 2021 through a placing and open offer. US$5.6 million has already been contributed to date into the JV by Accsys, with US$3.8million by Eastman.

$70 million of the total project cost, will be funded through an eight-year term loan to Accoya USA, LLC from First Horizon Bank (FHB) of Tennessee, USA.

FHB are also providing a further US$10 million revolving line of credit to be utilised to fund working capital.

The FHB term loan is secured on the assets of the JV and will be supported by the JV’s shareholders, including US$50 million through a limited guarantee provided by each of the JV parties on a pro-rata basis, with Accsys’ 60% share representing US$30 million. An attractive interest rate has been secured which is below the Group’s average cost of debt and reflects the Project’s strength and underlying credit support.

Principal repayments commence one year following the completion and start-up of the facility, and are calculated on a ten-year amortisation period. The JV was advised by Dresner Partners, a Chicago based, mid-market investment bank, in relation to the project debt financing.

Rob Harris, CEO of Accsys, commented: “We are delighted to move forward with the construction phase of our North American joint venture with Eastman. Our Accoya USA JV will allow Accsys to further address the strong and growing demand in the US market, which we believe is the largest addressable market for Accoya.

We are excited to demonstrate the ability to replicate our facilities from Arnhem, showing how Accsys’ production footprint can scale globally as we move towards our goal of increasing production capacity to 200,000m3 a year by 2025.”

Brad Lich, Eastman Executive Vice President and Chief Commercial Officer commented: “We’re pleased to partner with Accsys and excited to achieve this very important milestone. Eastman is committed to becoming a leading sustainable materials company, and Accoya’s value proposition as a sustainable building material is compelling. The great collaboration between our teams brings a wealth of complementary experience and knowledge together, and positions Accoya USA, LLC very well to benefit from the synergy between our acetyls business and the Accoya production process. We look forward to progressing the Accoya USA story and delivering on the great potential in the North American market.”

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