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Friday, November 27, 2020

Bioamber Inc (OTCMKTS:BIOAQ) on the Turnaround Trail?

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In the category of distressed assets starting to show signs of a turnaround, Bioamber Inc (OTCMKTS:BIOAQ) strikes us as a particularly compelling example, particularly in terms of its recent action. The technicals are frankly pointing to an active bullish breakout candidate worth a close look. As far as recent catalysts, the company most recently announced that it has received formal Quebec court approval for debtor-in-possession (DIP) financing.

According to that release, “This funding will enable the execution of the Sales and Investor Solicitation Process (SISP) that commenced on June 1, 2018, as well as the continued operations of the Sarnia manufacturing facility: for the SISP, non-binding letters of intent are now due by June 29, 2018, with binding term sheets being due by July 31, 2018; the stay of proceedings against the petitioners has been extended by the court to July 31, 2018, consistent with the timing of the SISP; a C$3 million DIP financing, provided by Maynbridge Capital, will be disbursed to BioAmber in two tranches: up to CAN$2 million can be disbursed through July 31 and an additional CAN$1 million can be disbursed after July 31, assuming the receipt of an LOI.”

Bioamber Inc (OTCMKTS:BIOAQ) bills itself as an industrial biotechnology company that produces and sells bio-succinic acid to various chemical market customers primarily in the United States and Canada.

Its proprietary technology platform combines industrial biotechnology and chemical catalysis to convert renewable feedstocks into chemicals that are replacements for petroleum-derived chemicals.

The company’s bio-succinic acid is used in various applications, including plasticizers, polyurethanes, personal care products, resins and coatings, de-icing solutions, PET resins, lubricants, polybutylene succinate, fine chemicals, and food additives. Its product pipeline also includes bio-succinic acid derivatives, such as 1, 4 butanediol and tetrahydrofuran used in elastomers, engineering plastics, shoe soles, spandex, and solvents; succinic acid based polyesters for use in automotive interiors, fibers and non-wovens, food packaging, plastic bags and cups, and organic composite boards; and C6 building block chemicals comprising adipic acid, caprolactam, and hexamethylenediamine used in carpets, engineering plastics, textiles and fibers, films, and polyurethanes.

The company was formerly known as DNP Green Technology, Inc. and changed its name to BioAmber Inc. in September 2010. BioAmber Inc. is headquartered in Montreal, Canada.

According to company materials, “BioAmber (OTCPK:BIOAQ) is a renewable materials company. Its innovative technology platform combines biotechnology and catalysis to convert renewable feedstock into building block materials that are used in a wide variety of everyday products including plastics, paints, textiles, food additives and personal care products.”

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We’ve witnessed in excess of 130% piled on for shareholders of the company during the trailing month, but this action is running counter to the larger trend in the name. Moreover, the name has registered increased average transaction volume recently, with the past month seeing 52% over the long run average.

“The approval of DIP financing is a positive milestone in the continued restructuring of BioAmber. Throughout the process, BioAmber is successfully serving our customer base and continues to supply high-quality bio-succinic acid to companies around the world.  We would like to thank our customers for their support and willingness to work with us through this process.  With this favorable court decision, we are pleased to be able to continue operations in Sarnia to meet the growing demand we’re seeing from the market,” stated Rick Eno, Chief Executive Officer.  “In the longer term, BioAmber has a number of strategic and financial investors evaluating an investment as part of the SISP.  We are optimistic that the closing of a transaction will provide our customers long-term supply assurance from the Sarnia facility. We will continue to provide updates throughout the process.”

Earning a current market cap value of $9.2M, BIOAQ has a significant war chest ($4.6M) of cash on the books, which compares with about $4.9M in total current liabilities. BIOAQ is pulling in trailing 12-month revenues of $14.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 754.6%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $BIOAQ stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $BIOAQ, either long or short, and we have not been compensated for this article.

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