Algae.Tec Limited (ASX:AEB, OTCQX: ALGXY, FWB:GZA:GR) has welcomed the signing of the agreements with Reliance Industrial Investments and Holdings Ltd. (RIIHL), as it provides the company with the necessary support to fund and launch its Global Biofuels Division.
According to the ASX announcement, the agreements incorporate a subscription agreement and equipment supply agreement, while paving the way for discussing conditions for future commercial algae plants following the successful completion of the pilot plant.
The subscription agreement deals with the issue of $1.5 million worth of shares and provides RIIHL with a $5 million 5 year option on the shares, with the option exercise price set at the 90 day volume weighted average share price, amounting to 16.3% share. According to the terms of the deal, the shares will be issued immediately and RIIHL will make additional investments by exercise of $1.2 million of options over the next two years.
The technical and equipment agreements provide the technical goals that Algae.Tec is obliged to meet, as well as the costs that RIIHL will pay for the pilot plant and technical supervision.
“This is a very exciting step forward by Algae. Tec,” said Peter Hatfull, Algae. Tec’s Managing Director.
“The new biofuels facility to be built in India will be fully funded by Reliance, leaving the equity injection to be used solely for working capital purposes.”
Mr Hatfull said the level of financial backing and ongoing support was just what Algae.Tec needed to fulfil their objectives.
“It’s a fact of business life that emerging companies need funding injections and the technical grunt of this type to transition into commercial phase,” said Mr Hatfull.
“It’s good news for Algae.Tec and the algae biofuels sector.”
The Algae.Tec Biofuels Division is operated through the Company’s wholly owned subsidiary, Algae Energy Inc.
The goal of Algae.Tec is to work with strategic partner Reliance to deploy Algae.Tec growth platform technology to produce algae biofuels in India and expand its foothold in Asia to meet growing demands for fuels.
Algae.Tec has recently undergone an expansion program to strengthen its presence into the nutraceuticals market to meet growing demands for Spirulina and Chlorella.
“It’s exciting to have two distinct divisions with strong strategic partners with both divisions participating in massive global markets,” said Mr Hatfull.
Algae.Tec is an algae products company focused on commercializing technology that produces algae to manufacture sustainable products including proteins and oils such as biofuels. Founded in 2007, the company has offices in Atlanta, Georgia and Perth, Western Australia.