BION.L Regulatory News (BION)

22 September 2020

BiON plc

("BiON" or "the Company")

Acquisition of Biogas Power Plants, Notification of Results and Financing

BiON (AIM: BION), an environmental engineering, wastewater treatment and renewable energy solutions company, is pleased to announce the acquisition of two biogas power plants ("the Acquisition") from its associate company, Megagreen Energy Sdn Bhd ("MGE"), which increases its installed capacity to 7.0MW, and the arrangement of additional financing facilities. The Company also provides notification of its results for the 12-month period ended 31 December 2019 ("2019 Accounts") and six-month period ended 30 June 2020.

Acquisition of Two Biogas Power Plants from MGE

The Company is pleased to announce that through its subsidiary, BiON Sdn Bhd ("BSB"), it has conditionally acquired two biogas power plants ("BPPs"), Nasarudin and Seberang Perak (both in Perak, Malaysia), from its associate company, Megagreeen Energy Sdn Bhd, for a total consideration of MYR45.99m. The Acquisition is being funded via a combination of borrowing from the Small Medium Enterprise Development Bank Malaysia Berhad ("SME Bank") (MYR32.0m) and cash (MYR13.99m). The cash element is being offset against receivables due from MGE. The Acquisition of two BPPs, with a combined installed capacity of 3.0MW, increases the Company's installed capacity to 7.0MW. Commercial operations at the two BPPs are expected to commence by year end, subject to the receipt of approvals from the relevant authorities. The BPPs are under the Malaysian Feed-in-Tariff ("FiT") programme with 16-year power purchase agreements with Tenaga Nasional Berhad, the country's largest integrated electricity company. Once the two BPPs are running at full capacity, they are expected to contribute approximately MYR9.0m (approx. £1.7m) in revenues per annum over the 16-year period.

MGE is a renewable energy provider established in 2014 and based in Sabah, Malaysia. It is an associate company of BiON through BSB, which has a 15% interest in MGE, whilst the other shareholders comprise Mega Hijau Makmur Sdn Bhd and Felcra Berhad that hold 70% and 15% interest respectively. BSB is also the engineering, procurement, construction and commissioning contractor for MGE's BPP projects.

In connection with the Acquisition, the Company has arranged an Islamic banking facility with the SME Bank ("SME Facilities") in the total amount of MYR55.3m and comprising:

(1) MYR32.0m to part finance the Acquisition of two BPPs from MGE;

(2) MYR6.2m to refinance its debt with Malaysia Debt Ventures Berhad for Kahang BPP;

(3) MYR12.1m to finance up to 80% of the remaining project costs in connection with the Company's four BPPs; and

(4) MYR5.0m revolving financing facility for working capital requirements.

The key terms of the SME Facilities (1) to (3) are as follows:

- The facilities are for a period of 15 years (180 months) with a grace period of 12 months during which only the profit (interest) is required to be serviced before both principal and profit (interest) is paid in instalments from the 13th month onwards.

- The facilities bear an interest rate of 8.35% per annum at present as it comprises base financing rate ("BFR"), currently at 6.85% per annum and subject to change from time-to-time, plus 1.5% per annum during the financing period. There is a cap (ceiling profit rate) agreed at the time of approval at 10.85% per annum comprising BFR + 4.0%.

- The three SME Facilities are secured over the Company's assets and have no redemption fee.

The fourth of the SME Facilities for the working capital requirements bears the same interest and is secured over the same assets as set out above. The facility tenure is for 60 months (5 years) from the first disbursement. The profit (interest) under this facility is to be serviced monthly in arrears with the principal paid upon maturity or earlier with prior written notice from the Company. This facility is subject to annual review and renewal. 

Notification of Results

The Company is working with its auditors towards announcing its 2019 Accounts before the end of the extended 30 September 2020 deadline. Also, pursuant to the guidance published by the London Stock Exchange in respect of the temporary measures for the publication of half-yearly reports for AIM companies, BiON intends to utilise the additional one-month period to prepare its interim results for the six-month period ended 30 June 2020. As such, the Company will release its interim results by 30 October 2020.

Financing and Related Party Transaction

In addition to the SME Bank financing facility, the Company has entered into an unsecured finance facility of up to MYR10m with Serba Dinamik Sdn Bhd, a subsidiary of Serba Dinamik Holdings Berhad ("Serba Facility"). The Serba Facility carries an interest rate of 5% on all amounts drawn down by the Company. The Company can draw down under the Serba Facility at any time, and has now drawn down the full amount, with the principal being repayable by the Company at the end of the loan term of 54 months, which is in January 2025, and interest serviced monthly. By virtue of Dato' Dr. Ir. Ts. Mohd Abdul Karim Abdullah, Non-executive Chairman of BiON, being the Managing Director, CEO and major shareholder in Serba Dinamik Holdings Berhad, of which Serba Dinamik Sdn Bhd is a wholly-owned subsidiary, Tuan Syed Nazim, CEO, Director and a 20% shareholder in BiON, being the Non-Independent Executive Director of Serba Dinamik Holdings Berhad and the Serba Group aggregate holding of 20% of the Company's issued share capital, the Serba Facility constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The independent directors of the Company, being Datuk Haji Radzali bin Hassan, Mr. Aditya Chathli and Mr. Habizan Rahman Habeeb Rahman, consider, having consulted with Beaumont Cornish Limited, the Company's Nominated Adviser, that the terms of the Serba Facility are fair and reasonable insofar as the Company's shareholders are concerned.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the EU Market Abuse Regulation (596/2014).

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