New IPO to convert waste plastic to low sulphur diesel
September 5, 2005 Current Australian IPO Axiom Energy Limited has an interesting proposition for potential investors – the company will produce low sulphur diesel from waste plastics that until now could not be recycled and would otherwise end up as landfill. Axiom also plans to be the largest producer of biodiesel on the Australian Eastern seaboard. Currently, 88 per cent of the 1.5 million tonnes of plastic consumed in Australia annually is sent to landfill, this amount could convert to more than 1 billion litres of low sulphur diesel. For example, a simple ice-cream container, weighing just 68 grams can be converted into a diesel fuel which will power a VW Golf car with a diesel engine for approximately one mile.
Australian investors are being offered a stake in Axiom Energy Limited AUD$37.6 million initial public offering, which opened 29 August 2005. A total of 47 million shares at 80 cents each is on offer raising AUD$37.6 million and creating a market value at listing of AUD$82.7 million. The proceeds of the IPO will be used to acquire, upgrade and expand Axiom Energy’s fuel plants.
Axiom Energy Limited, Managing Director, David Vinson, says the company is seizing the opportunity by pursuing economically viable solutions to meet the growing need for sustainable energy sources. “The entry of these two products - low sulphur diesel and biodiesel into the market is well timed with a growing Australian diesel fuel market, rising crude oil prices, increasing demand for environmentally friendly and sustainable fuels and government tax incentives to promote the use of these fuels.
“Axiom Energy has an agreement in place with a national petro-chemical distributor to distribute production output of both low sulphur diesel and biodiesel for sale in the growing diesel market in Australia,” he said.
Waste plastics into low sulphur diesel
Axiom Energy’s Low Sulphur Diesel is to be made from waste plastics and will be an automotive diesel fuel, which will have a sulphur content of less than 50 ppm. It will meet the new Australian mandatory standard enforceable from 1 January 2006.
Axiom Energy Limited first two low sulphur diesel from waste plastic plants will be built at Laverton, and commissioned in July 2006. These plants are forecast to produce 11 million litres of low sulphur diesel.
Axiom Energy has scope to build 13 more plants across Australia and New Zealand over the next five years as part of Axiom Energy’s exclusive agreement with the technology provider, Australian company Ozmotech.
Under an exclusive agreement, Visy Steel Products will source, sort and supply waste plastic for the production of low sulphur diesel.
“Many types of waste plastics that currently cannot be recycled will be converted into low sulphur diesel. For example, a simple ice-cream container, weighing just 68 grams can be converted into a diesel fuel which will power a VW Golf car with a diesel engine for almost 1.28 kilometres. “Other plastics that can be converted into low sulphur diesel include chemical and oil containers and bottles, municipal solid waste plastics such as wraps, packaging, bottles and toys; as well as milk crates, silage wraps, irrigation tubing, polypiping and polystyrene packaging,” said Mr Vinson. Currently, 88 per cent of the 1.5 million tonnes of plastic consumed in Australia annually is sent to landfill, this amount could convert to more than 1 billion litres of low sulphur diesel.
Renewable plant oils, animal fats and used cooking oil into Biodiesel Axiom Energy’s Biodiesel can be mixed in any ratio with petroleum diesel to create a blend, for sale on the general diesel market.
Biodiesel can decrease emissions of greenhouse gases by over 90% (biodiesel made from used cooking oil); it is non-toxic and improves operational performance.
Axiom Energy will also have the advantage of an existing facility in Laverton, Victoria, which is being acquired from The Victor Smorgon Group. The Laverton plant will undergo an immediate upgrade and be commissioned in July 2006. It is forecast to produce 70 million litres of biodiesel in FY2007 and will have a nameplate capacity of 100 million litres per annum.
Major trading companies, Cargill and Gardner Smith will supply the renewable plant oils and animal fats, while used cooking oil will be obtained from Victoria’s largest used cooking oil collection business, acquired by Axiom Energy from the Victor Smorgan Group.
Axiom Energy $37.6 million IPO opens to Australian investors Axiom Energy IPO formally opened August 29 with the offer of 47 million shares at 80 cents each, raising $37.6 million and creating a market value at listing of US$82.7 million.
ABN AMRO Morgans Corporate Limited has underwritten the offer, which will close 29 September 2005.
With agreements for all production inputs, technology and production outputs secured, Axiom Energy’s business model is designed to generate profits immediately upon commissioning of both its low sulphur diesel and biodiesel plants in July 2006. Revenues of US$70.1 million, EBITDA of US$16.8 million, NPAT of US$10.1 million and a free cash flow of $14.4 million are forecast for FY2007.
The proceeds of the IPO will be used to:
- Acquire the Laverton plant and one of Victoria’s largest used cooking oil collectionbusinesses from The Victor Smorgon Group;Upgrade the Laverton plant to increase production capacity to 100 million litres of biodieselper annum;Fund the construction of two plants to produce Low Sulphur Diesel from waste plastic; andProvide for working capital.
Prospectus Date 17 August 2005Offer Opened 9.00am 29 August 2005 (EST)Offer Closes 5.00pm 29 September 2005 (EST)Allotment and Issue of Shares 29 September 2005Expected Dispatch of Security Holding Statements 3 October 2005Expected Commencement of ASX Trading 11.00am 10 October 2005