Burcon Agrees to Terms with its Alliance Partner for a Protein Production Facility
Burcon NutraScience (TSX: BU) (OTCQB: BRCNF) has entered into an agreement with RE ProMan, for a protein production facility in North America. The deal includes a seven-year manufacturing agreement followed by a ten-year lease arrangement. Under the terms, ProMan will purchase the facility and grant Burcon exclusive access to 100% of manufacturing capacity for its plant protein portfolio.
The agreement includes an annual production fee with a fixed portion totaling US$19.8 million over seven years, plus variable costs. First-year sales are projected at $1-3 million, with double-digit revenue expected in year two. Gross margins are targeted to exceed 50% as capacity utilization increases, with profitability and positive cash flow anticipated in 2026.
Due to ProMan being controlled by Burcon director John Vassallo, the agreement requires disinterested shareholder approval. The deal is conditional on Burcon receiving regulatory approvals, ProMan completing the facility acquisition by April 30, 2025, and Burcon securing minimum financing of CAD$7 million.
Burcon NutraScience (TSX: BU) (OTCQB: BRCNF) ha stipulato un accordo con RE ProMan per una struttura di produzione di proteine in Nord America. L'accordo include un contratto di produzione di sette anni seguito da un contratto di locazione di dieci anni. Secondo i termini, ProMan acquisterà la struttura e concederà a Burcon accesso esclusivo al 100% della capacità produttiva per il suo portafoglio di proteine vegetali.
L'accordo prevede una tassa di produzione annuale con una parte fissa che ammonta a 19,8 milioni di dollari statunitensi su sette anni, oltre ai costi variabili. Le vendite del primo anno sono previste tra 1 e 3 milioni di dollari, con ricavi a doppia cifra attesi nel secondo anno. Si prevede che i margini lordi superino il 50% man mano che aumenta l'utilizzo della capacità, con profittabilità e flusso di cassa positivo previsti per il 2026.
Poiché ProMan è controllata dal direttore di Burcon, John Vassallo, l'accordo richiede l'approvazione degli azionisti non interessati. L'accordo è soggetto all'approvazione normativa di Burcon, al completamento dell'acquisizione della struttura da parte di ProMan entro il 30 aprile 2025 e all'assicurazione di un finanziamento minimo di 7 milioni di dollari canadesi da parte di Burcon.
Burcon NutraScience (TSX: BU) (OTCQB: BRCNF) ha firmado un acuerdo con RE ProMan para una planta de producción de proteínas en América del Norte. El acuerdo incluye un contrato de fabricación de siete años seguido de un arreglo de arrendamiento de diez años. Según los términos, ProMan comprará la instalación y otorgará a Burcon acceso exclusivo al 100% de la capacidad de producción para su cartera de proteínas vegetales.
El acuerdo incluye una tarifa de producción anual con una parte fija que totaliza 19.8 millones de dólares estadounidenses durante siete años, además de los costos variables. Se proyecta que las ventas del primer año alcancen entre 1 y 3 millones de dólares, con ingresos de dos dígitos esperados en el segundo año. Se espera que los márgenes brutos superen el 50% a medida que aumente la utilización de la capacidad, y se anticipa rentabilidad y flujo de efectivo positivo en 2026.
Dado que ProMan está controlada por John Vassallo, director de Burcon, el acuerdo requiere la aprobación de accionistas no interesados. El acuerdo está condicionado a que Burcon reciba aprobaciones regulatorias, a que ProMan complete la adquisición de la instalación antes del 30 de abril de 2025 y a que Burcon asegure un financiamiento mínimo de 7 millones de dólares canadienses.
Burcon NutraScience (TSX: BU) (OTCQB: BRCNF)는 북미에 있는 단백질 생산 시설을 위해 RE ProMan과 계약을 체결했습니다. 이 거래에는 7년간의 제조 계약과 그 뒤에 10년간의 임대 계약이 포함되어 있습니다. 조건에 따르면, ProMan은 시설을 구매하고 Burcon에게 식물 단백질 포트폴리오에 대한 100% 제조 용량에 대한 독점 접근을 부여합니다.
계약에는 7년에 걸쳐 총 1,980만 달러의 고정 부분이 포함된 연간 생산 요금이 있으며, 변수 비용도 추가됩니다. 첫 해 판매는 100만 달러에서 300만 달러로 예상되며, 두 번째 해에는 두 자릿수 수익이 예상됩니다. 용량 활용도가 증가함에 따라 총 매출은 50%를 초과할 것으로 예상되며, 2026년에는 수익성과 긍정적인 현금 흐름이 예상됩니다.
ProMan이 Burcon 이사 John Vassallo에 의해 통제되기 때문에 계약은 이해 관계가 없는 주주 승인을 필요로 합니다. 이 거래는 Burcon이 규제 승인을 받고 ProMan이 2025년 4월 30일까지 시설을 인수하는 것과 Burcon이 최소 700만 캐나다 달러의 자금을 확보하는 조건으로 진행됩니다.
Burcon NutraScience (TSX: BU) (OTCQB: BRCNF) a conclu un accord avec RE ProMan pour une installation de production de protéines en Amérique du Nord. L'accord comprend un contrat de fabrication de sept ans suivi d'un bail de dix ans. Selon les termes, ProMan achètera l'installation et accordera à Burcon un accès exclusif à 100 % de la capacité de production pour son portefeuille de protéines végétales.
L'accord inclut des frais de production annuels avec une portion fixe totalisant 19,8 millions de dollars américains sur sept ans, plus des coûts variables. Les ventes de la première année sont projetées entre 1 et 3 millions de dollars, avec des revenus à deux chiffres attendus au deuxième année. Les marges brutes visent à dépasser 50 % à mesure que l'utilisation de la capacité augmente, avec une rentabilité et un flux de trésorerie positif anticipés en 2026.
Étant donné que ProMan est contrôlée par John Vassallo, directeur de Burcon, l'accord nécessite l'approbation des actionnaires non intéressés. L'accord est conditionné à la réception par Burcon des approbations réglementaires, à l'acquisition de l'installation par ProMan d'ici le 30 avril 2025 et à Burcon qui sécurise un financement minimum de 7 millions de dollars canadiens.
Burcon NutraScience (TSX: BU) (OTCQB: BRCNF) hat eine Vereinbarung mit RE ProMan für eine Proteinproduktionsanlage in Nordamerika getroffen. Der Vertrag umfasst eine siebenjährige Produktionsvereinbarung, gefolgt von einer zehnjährigen Mietvereinbarung. Nach den Bedingungen wird ProMan die Anlage kaufen und Burcon exklusiven Zugang zu 100% der Produktionskapazität für sein Pflanzenproteinportfolio gewähren.
Die Vereinbarung umfasst eine jährliche Produktionsgebühr mit einem festen Betrag von insgesamt 19,8 Millionen US-Dollar über sieben Jahre, zuzüglich variabler Kosten. Die Verkaufszahlen im ersten Jahr werden auf 1 bis 3 Millionen US-Dollar geschätzt, mit einem zweistelligen Umsatz im zweiten Jahr. Die Bruttomargen sollen 50 % übersteigen, während die Kapazitätsauslastung steigt, wobei im Jahr 2026 Rentabilität und positiver Cashflow erwartet werden.
Da ProMan von Burcon-Direktor John Vassallo kontrolliert wird, erfordert die Vereinbarung die Zustimmung der nicht interessierten Aktionäre. Der Deal ist davon abhängig, dass Burcon regulatorische Genehmigungen erhält, dass ProMan die Anlage bis zum 30. April 2025 erwirbt und dass Burcon eine Mindestfinanzierung von 7 Millionen CAD sichert.
- Exclusive access to 100% of manufacturing capacity for protein production
- Projected first-year sales of $1-3 million with double-digit growth in year two
- Target gross margins over 50%
- Expected profitability and positive cash flow by 2026
- Right of first refusal to purchase the facility
- High fixed costs of US$19.8 million over seven years
- Additional variable costs based on operating expenses
- Requires minimum financing of CAD$7 million
- Related party transaction requiring shareholder approval
Vancouver, British Columbia--(Newsfile Corp. - February 3, 2025) - Burcon NutraScience Corporation (TSX: BU) (OTCQB: BRCNF) ("Burcon" or the "Company"), a global technology leader in the development of plant-based proteins for foods and beverages, is pleased to announce that it has entered into an agreement with its alliance partner, RE ProMan, LLC ("ProMan"), for the purchase and operation of a protein production facility in North America.
Burcon and ProMan, a company led by Mr. John Vassallo, a director and shareholder of the Company, have entered into a binding term sheet setting out the key terms of a contract manufacturing arrangement between the parties. These terms form a part of a definitive agreement between the parties with respect to the manufacture of Burcon's protein products and subsequent lease of a production facility (collectively, the "Manufacturing Agreement"), which definitive agreement will be entered into in due course.
"We are excited to join forces with Burcon to deliver their groundbreaking plant-based protein solutions to market," said Mr. John Vassallo, Burcon's director. "This partnership reflects our strong belief in the future of sustainable, plant-based nutrition and Burcon's ability to lead in the fast-growing, multi-billion-dollar protein ingredients industry."
"This partnership marks a pivotal step in Burcon's evolution toward the company we aspire to be," said Kip Underwood, Burcon's chief executive officer. "By pairing a strategic real estate investment with a proven go-to-market approach in food technology, we are seizing the best opportunity in our history to establish a direct route to market for our innovative protein technologies."
Key Terms of Manufacturing Agreement:
- ProMan will purchase a protein production facility and grant Burcon exclusive access to
100% of manufacturing capacity for production of Burcon's plant protein portfolio; - Burcon to use ProMan as its exclusive manufacturer of Burcon's protein products;
- Burcon to produce and sell its entire portfolio of plant proteins;
- Seven-year term Manufacturing Agreement, after which the Manufacturing Agreement transitions to a ten-year lease agreement pursuant to which Burcon will lease the production facility from ProMan;
- Burcon to pay ProMan an annual production fee during the initial seven-year term and a lease fee at market rates during the subsequent ten years; and
- ProMan has granted Burcon a right of first refusal to purchase the facility in the event ProMan desires to sell the facility.
- (Additional details outlined below under Manufacturing Agreement Terms and Conditions)
As announced in Burcon's news release dated January 31, 2025, ProMan has entered into an agreement to acquire the production facility. Closing of the acquisition of the facility is subject to satisfaction of certain conditions. The production facility will have the infrastructure and processing capabilities to produce all of Burcon's proteins, with an option for modular production expansion. The facility will process locally sourced, North American raw materials.
Following the acquisition of the production facility by ProMan and the commencement of the term of the Manufacturing Agreement, Burcon expects to complete installation of propriety unit operations and begin commercial scale production of its protein products. First-year sales are projected to be in the range of
Manufacturing Agreement Terms and Conditions
Exclusivity and Term
Under the Manufacturing Agreement, Burcon's portfolio of plant proteins (the "Products") will be manufactured by ProMan at a production facility (the "Production Facility") located in North America and purchased by Burcon. The term (the "Term") of the Manufacturing Agreement is seven years, after which the parties will enter into a ten-year lease agreement, during which Burcon expects to pay market lease rates for use of the Production Facility (the "Property Lease Term"). The parties have mutually agreed that, subject to certain conditions, Burcon will use ProMan as its exclusive manufacturer of the Products and ProMan will use the Production Facility exclusively to manufacture the Products for Burcon.
Responsibilities
Burcon will be responsible for all costs relating to the acquisition and delivery to ProMan of all raw materials and ingredients for the manufacture of the Products, utilities for operation of the Production Facility and for all routine maintenance costs of the equipment at the Production Facility. ProMan will be responsible for all costs related to the operation of the Production Facility, including ProMan's expenses for labor and personnel, permitting, licensing, insurance, overhead and property taxes.
Annual Production Fee
In consideration for the acquisition of the Products from ProMan under the Manufacturing Agreement and for making the Production Facility available for the production of Products, Burcon will pay ProMan an annual fee (the "Annual Production Fee") during the Term based on a formula comprising of a fixed fee and a variable amount consisting of total operating expenses, which includes the aggregate production labour, production overhead, insurance premiums and property taxes payable by ProMan in respect of the Production Facility and the production of the Products therein. During the seven-year Term of the Manufacturing Agreement, the fixed fee portion of the Annual Production Fee Burcon will pay ProMan will be US
Pursuant to the TSX Company Manual (the "Manual"), ProMan is considered an insider of Burcon since a director of Burcon, Mr. John Vassallo, controls ProMan. The aggregate Annual Production Fee payable to ProMan under the Manufacturing Agreement represents more than
Section 501(c) Illustrative Table
| Scenario | Aggregate over the 7-year term of the Fixed Portion of the Annual Production Fee | Aggregate over the 7-year term of the Variable Portion of the Annual Production Fee | Aggregate over the 7-year term of the fixed and variable portions of the Annual Production Fee | Consideration Payable to ProMan under the January 2025 Loan | Aggregate Consideration Payable to ProMan in accordance with Section 501(c)(1) | Percentage of Burcon's Market Capitalization for Purposes of Section 501(c) of TSX Manual(2) |
| (a) | (b) | ((a)+(b)) | (d) | ((a)+(b)+(d)) | ||
| Scenario #1 | US | US | US | US | US | |
| Scenario #2 | US | US | US | US | US | |
| Scenario #3 | US | US | US | US | US | |
| Scenario #4 | US | US | US | US | US |
Note: This table is provided for illustrative purposes only in order to present shareholders with a conceptual understanding of the value that may be payable to ProMan under the Manufacturing Agreement. Actual amounts payable to ProMan under the variable portion of the Annual Production Fee may be higher or lower, depending on the actual amount of operating expenses incurred in respect of the Production Facility. The above disclosure should not be considered a financial outlook, forecast or guidance.
(1) This does not include the amounts payable for the ten-year lease portion, which amount will be based on market lease rates at the commencement of the ten-year lease term.
(2) Based on a US dollar to Canadian dollar exchange rate of 1.4484 as of January 31, 2025 as reported by the Bank of Canada and the market capitalization of Burcon as of market close on January 31, 2025.
As a result, pursuant to Section 501(c) of the Manual, Burcon will be required to obtain disinterested shareholder approval for the payment of the Annual Production Fee and lease fee to ProMan under the Manufacturing Agreement and subsequent lease. Burcon intends to seek disinterested shareholder approval of the Manufacturing Agreement (including the lease) by way of consent resolution in accordance with Section 501(c) of the Manual, rather than by holding a shareholder meeting. For purposes of obtaining disinterested shareholder approval under Section 501(c) of the Manual, the 8,270,056 common shares of Burcon which ProMan, together with its affiliates, exercises direction and control over, which represent
Right of First Refusal
During the Term and the Property Lease Term, ProMan has granted Burcon a right of first refusal to purchase the Production Facility in the event ProMan desires to sell the Production Facility or otherwise receives a bona fide offer to buy the Production Facility from an arms-length third party.
Representations and Warranties
The parties have made certain representations and warranties under the term sheet and will make representations and warranties in the Manufacturing Agreement customary for a transaction of its nature.
Termination
The term sheet and Manufacturing Agreement may be terminated at any time by mutual written agreement of the parties, by a party if the other party is in material breach of its obligations under the Manufacturing Agreement and such breach is not remedied within 180 days or if the other party suffers an insolvency event, as well as certain other termination rights customary for a transaction of this nature.
Conditionality of Manufacturing Agreement
The obligations of the parties under the term sheet and the Manufacturing Agreement are subject to receipt by Burcon of all required regulatory approval, including approval of the TSX and Burcon's shareholders in accordance with Section 501(c) of the Manual, ProMan completing the acquisition of the Production Facility on or before April 30, 2025 and Burcon completing a minimum financing (including through the rights offering announced on November 20, 2024) of at least CAD
Related Party Transaction
Mr. John Vassallo is a related party of Burcon for purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") as he is a director of Burcon. The Manufacturing Agreement between Burcon and ProMan is considered a "related party transaction" pursuant to MI 61-101. Burcon is relying on the exemption available under Section 5.5(d) of MI 61-101 from the formal valuation requirements and Section 5.7(1)(c) of MI 61-101 from the minority shareholder approval requirements in respect of the Manufacturing Agreement. The term sheet was approved by the independent members of the board of directors of Burcon, with Mr. John Vassallo abstaining from the vote. Burcon will file a material change report containing the prescribed disclosure under MI 61-101 on or before February 13, 2025.
About Burcon NutraScience Corporation
Burcon is a global technology leader in the development of plant-based proteins for foods and beverages. Our proteins exhibit superior functionality, taste and nutrition, making them ideal ingredients for food formulators. With over two decades of experience, Burcon has amassed an extensive patent portfolio covering its novel plant-based proteins derived from pea, canola, soy, hemp and sunflower seeds, among other plant sources. Burcon is committed to delivering next-generation, best-in-class protein solutions, positioning itself as a key player in the rapidly expanding plant-based market. Supporting the growing trend towards a plant-based diet, Burcon offers sustainable protein ingredients that we believe are better for you and better for the planet. For more information, visit www.burcon.ca.
Forward-Looking Information Cautionary Statement
The TSX has not reviewed and does not accept responsibility for the adequacy of the content of the information contained herein. This press release contains forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements or forward-looking information involve risks, uncertainties and other factors that could cause actual results, performances, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements or forward-looking information can be identified by words such as "anticipate," "aim", "intend," "plan," "goal," "project," "estimate," "expect," "believe," "future," "likely," "may," "should," "could," "will" and similar references to future periods. All statements included in this release, other than statements of historical fact, are forward-looking statements. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements or information. Forward-looking statements in this press release, include, among other, statements about satisfaction of the conditions to the term sheet, including receipt of TSX and shareholder approval of the Manufacturing Agreement and completion of the acquisition of the Production Facility by ProMan. Important factors that could cause actual results to differ materially from Burcon's plans and expectations include the implementation of our business model and growth strategies; trends and competition in our industry our future business development, financial condition and results of operations and our ability to obtain financing cost-effectively; potential changes of government regulations; inability of ProMan to complete the purchase of the Production Facility, and other risks and factors detailed herein and from time to time in the filings made by Burcon with securities regulators and stock exchanges, including in the section entitled "Risk Factors" in Burcon's annual information form for the year ended March 31, 2024 and its other public filings with Canadian securities regulators on SEDAR+ at www.sedarplus.ca. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements or information. Any forward-looking statement or information speaks only as of the date on which it was made, and, except as may be required by applicable securities laws, Burcon disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Although Burcon believes the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance, and, accordingly, investors should not rely on such statements.
Industry and Investor Contact
Paul Lam
Director, Investor Relations and Communications
Burcon NutraScience Corporation
Tel (604) 733-0896, Toll-free (888) 408-7960
plam@burcon.ca www.burcon.ca
Media Contact:
Steve Campbell, APR
President
Campbell & Company Public Relations
Tel (604) 888-5267
TECH@CCOM-PR.COM
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/239345
FAQ
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