Scandinavian Enviro Systems AB (publ) has signed a term sheet with TreadCraft Carbon LLC, Buffalo, NY, USA, on the key parts of an agreement to establish a jointly owned plant for the recovery of used vehicle tyres based on Enviro's leading technology.
Enviro Signs Term Sheet with TreadCraft Carbon LLC
This means that the two parties have now agreed on the main conditions for a plant deal. A final agreement is expected to be finalised during the second half of 2019 and would entail the sale of a recycling plant, worth approximately between EUR 25 and 30 million, as well as license revenue and future profits.
“We altered our strategy a year ago and have since focused on plant projects where we can share future revenue by being part-owners. With this agreement, we have passed an important milestone, as it both confirms Enviro's new strategy and constitutes the first plant outside Sweden where we become one of the owners,” says Thomas Sörensson, Enviro CEO.
In the signed term sheet, the parties agree on key terms such as the scope of delivery, construction cost, payment and delivery terms, guarantees, contractual penalties, applicable law and more. Based on the agreement, the parties shall now negotiate the terms of a complete and definitive construction agreement regarding a recycling plant on South Park Avenue, Buffalo, NY, USA. This in addition to other agreements, including the terms of a joint venture and the licensing agreement. These negotiations are all conditional on financing, a process that is also ongoing. TreadCraft Carbon LLC is a subsidiary to TreadCraft Ltd., Dunneville, Ontario, Canada.
Other projects that have been evaluated are still relevant, as the increasing market interest in recovered carbon black, rCB, and bio-oil will require additional plants for recovering end-of-life vehicle tyres.
Enviro owns and operates a plant for recovering end-of-life vehicle tyres in Åsensbruk, Sweden. The plant has a capacity of 6000 tonnes of tyres per year. The carbon black from the plant is used, among other things, to produce rubber components for the automotive industry and end customers include Volvo Cars, Trelleborg Wheel Systems and Elastomeric.