Mission NewEnergy Ltd. acquires stake in Indonesian project

By Erin Voegele | February 22, 2012

Mission NewEnergy Ltd. has announced the acquisition of an 85 percent stake in Singapore-based Oleovest Pte Ltd., which holds a 70 percent equity stake in PT Sinergi Oleo Nusantara, an Indonesian joint venture company that is 30 percent owned by PT Perkebunan Nusantara III. Mission NewEnergy has traditionally been involved in jatropha cultivation.

According to information released by Mission NewEnergy, PTSON will establish a new downstream palm oil and oleochemical complex under the joint venture agreement. The complex will be located at the PTPN III-owned Sei Mangkei Industrial Zone in North Sumatra. The first stage of the project is expected to include the development of a 600,000 ton edible oil refinery, a 250,000 ton (75 MMgy) biodiesel plant and a 100,000 ton fatty alcohol plant.

Information released by Mission NewEnergy noted that the $200 million project will require arranging approximately $140 million in debt financing and $60 million in equity before construction begins. Mission NewEnergy will initially invest $3 million to acquire the 80 percent stake in Oleovest and fund the initial operations of PT Sinergi Oleo Nusantara. According to Mission NewEnergy, once the initiative is fully funded, the project could be implemented over approximately three years.

In a press release announcing the acquisition, Nathan Mahalingam, group CEO of Mission NewEnergy, noted that the project is a good opportunity and new strategic direction for his company as it looks to diversity into a more established and ratable business.

Biodiesel Magazine was unable to reach a representative of the company for further comment on the acquisition and joint venture project, however, Mission NewEnergy has made several other announcements in recent weeks. In mid-February the company issued a notice stating that its gross revenue under a six month contract to supply sustainability-certified biodiesel to a global oil major is expected to be lower than initially projected. According to the company, the contract, which commenced in January, was expected to generate $40 million in revenue. That contract, however, allowed the customer the option to cancel monthly shipments and opt to pay Mission NewEnergy a fixed fee per cancelled shipment instead. While the January order was shipped as expected, and the February load was expected to be shipped as well, Mission NewEnergy noted that the customer cited the availability of cheaper supplies and cancelled the March and April shipments, which would reduce the expected revenue by approximately $14 million.

Also in February, the company issued a statement announcing an unaudited half yearly revenue of $20.3 million with a net profit after tax of $3.8 million for the six months ended Dec. 31. The respective figures from one year prior were $5.7 million and a loss of $14 million. According to Mission NewEnergy, the increase in revenue and profit between the reporting periods is primarily a result of a noncash gain on settlement of the series one convertible notes during the most recent reporting period.

In late January, Mission NewEnergy issued a notice saying it would restructure operations. In that announcement, the company stated that its 2011 jatropha harvest was significantly lower than expected. Mission NewEnergy attributed the lower-than-expected harvest to historically planting wild seed varieties that have large yield variability in the early years of growth. While maturity is expected to occur in the seventh year of planting, the average age of the company’s current acreage is less than three years old. The notice also stated that Mission NewEnergy has decided not to undertake further planting of jatropha until yield from existing acreage is determined. “Structural changes to the business are absolutely necessary in light of the current stage of development of the jatropha operations,” said Mahalingam in the statement. Due to the fact that it believes it has a viable refining business and that long-term jatropha operations will be profitable, the company said it would restructure its business to conserve cash. According to the January press release, the restructure is likely to include a reduction in operating expenditures, the divestment of noncore assets and raising further equity capital. 

 

 
 
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