An 8.8% ownership in the JV has been reached

Enviro press released this morning that it has an 8.8% equity stake in the JV with Antin following the historical compensation of SEK53m in shares (not considering the additional SEK53m received in cash).

We have previously anticipated that Enviro will need to invest around SEK150m in order to reach its targeted 30% equity stake in the JV - with the reasoning that the plant will cost SEK500m to construct and that 30% would, therefore, require SEK150m.

As such, using the same reasoning, it now seems that the total construction cost looks to amount to SEK600m, which is SEK100m higher than we expected. We have previously expected that the Uddevalla plant will be financed through 100% equity, which is still our base case. However, if this changes, we believe that the required investment could be lower (only covering the equity part of the total EV)

Historical costs have been compensated – and future milestone payments remain

The press release also states that Enviro has now been compensated for its historical costs related to the Uddevalla plant. It does, however, also state that Enviro will be granted future payments as additional milestones are met in the future. These payments will also take place half in cash and half in shares in the JV, of which the latter will continue until a pre-determined cap has been reached. Once the cap is reached, the compensation will continue in cash only.

It does not say at what level this might be or what the remaining total payments might amount to, and it is difficult to make a qualified guess. But if we had to guess, a cap of 15% would seem reasonable, and the remaining milestone payments could amount to 50%-75% of the total payments received for historical costs related to Uddevalla (i.e. around SEK50m-SEK75m).