NEWS UPDATE | 8 April 2019
Synthesis Energy Systems Enters Technology Purchase Option Agreement for Sale of its Gasification Technology
HOUSTON, April 08, 2019 (GLOBE NEWSWIRE) — Synthesis Energy Systems, Inc. (SES, Company) (NASDAQ: SES), today announced that the Company has entered into a Technology Purchase Option Agreement with Australian Future Energy Pty Ltd (AFE) for the sale of its subsidiary company, Synthesis Energy Systems Technologies, LLC (SEST) which owns the SES Gasification Technology (SGT) and its related SGT global business undertakings.
SES currently holds approximately a 36% ownership in AFE and is an active member on its Board of Directors. The Parties have agreed to an option period ending July 31, 2019 in which AFE will arrange for its financing to complete the transaction and SES will secure its necessary consents and the parties will complete the required definitive agreements.
The Technology Purchase Option Agreement establishes the major commercial terms to be set forth in the definitive agreements. Under these terms, upon completion of the definitive agreements, SES agrees to transfer 100% of its ownership of SEST to AFE, which includes its SGT related intellectual property, know-how and relevant patent rights, except that SES will retain all its ownership rights to the SGT technology business for China.
SES’ President and CEO, Robert Rigdon, stated, “We have completed several years of technology commercialization efforts in China, building commercial projects which operate efficiently and reliably providing SGT syngas for methanol production and for industrial syngas. However, we have not been able to deliver adequate finance results from China to allow us to continue supporting the cost of SGT technology commercialization on our own. After careful evaluation of options to continue SGT commercialization, we believe AFE’s proposed acquisition of SGT to be our best evaluated opportunity. Through this arrangement SGT can provide AFE’s Gladstone Energy and Ammonia Project and future projects with a lower cost to build and operate. As an owner in AFE, we believe that by building in Australia we can have higher confidence of financial results in the future once the
project is operating.”
Australian Future Energy’s Chief Executive Officer, Kerry Parker, stated, “We are very pleased to reach this agreement with SES. SES is one of the founders of our company and is a currently a major shareholder in our company. Our Gladstone Energy and Ammonia Project is our number one priority. The Gladstone Energy and Ammonia Project is being designed to produce approximately 700 tonnes per day of ammonia and approximately 11 petajoules of pipeline quality gas.
AFE has achieved significant development progress over the last 12 months with the Gladstone Energy and Ammonia Project, including:
- Being granted “Significant Project Status” by the Queensland Government – which will assist with streamlining the projectapproval and permitting processes;
- Commencement of the EIS (Environmental Impact Assessment) Process;
- Acquisition of 120 hectare development site in the Gladstone State Development Area;
- Signing of long-term offtake agreements for 100% of the project’s ammonia and pipeline quality gas – all with Tier 1 ASXlisted companies;
- Agreement with an international Tier 1 EPC organization on the detailed design and engineering for the project; and
- Progress towards the securing of required project finance for the development of the project.
As consideration, AFE has agreed to pay to SES:
- One million fully paid shares in AFE upon signing this agreement;
- Upon signing the definitive agreements, AFE will pay SES a total of $5.8 million in cash with the first $2.0 million beingpayable in three equal tranches. The first tranche is to be paid before the end of the option period with the second tranche paid no later than six months after the first tranche and the third tranche paid no later than 12 months from the date of payment of the first tranche;
- A final payment of $3.8 million is to be paid to SES upon the earlier of five years or AFE’s closing of the constructionfinancing of adequate scale to allow for release of detailed engineering and placement of orders for long-lead items and for one or more of the gasifier reactors or gasifier heat recovery steam generators for its Gladstone Energy and Ammonia Project, its first gasification project in the region.
Full news release can be found here.
For further information:
Mr Kerry Parker
Chief Executive Officer
Australian Future Energy Pty Ltd
Tel: +61 7 3905 9505
Mob: +61 (0) 498 080 874