Neo secures $75M loan to finance expansion and relocation of its environment emissions catalyst business
by CM Staff
Neo's current plant in Zibo, China will be relocated to a new facility (NAMCO) at a nearby industrial park that could increase Neo's production capacity from 4,000 to 5,500 tonnes per year.
TORONTO — Neo Performance Materials Inc. announces that the Company has entered into a loan agreement with Export Development Canada (EDC) for a term loan of up to US$75 million, to be advanced in three tranches of US$25 million, to finance the relocation, expansion, and sustainability upgrades to one of its environmental emissions catalyst manufacturing facilities.
The Credit Facility matures five years from the date hereof, with principal repayment beginning in two years from the date hereof. The outstanding principal amount carries an interest rate equal to the secured overnight financing rate, as administered by the Federal Reserve Bank of New York, plus an applicable margin. A number of the Company’s subsidiaries provided a guarantee and/or security in favour of EDC pursuant to the Loan Agreement.
Prior to drawing each of the three tranches, the Loan Agreement requires certain conditions to be fulfilled including maintenance of cost performance relative to budget, disclosures related to environmental and social law compliance, and other certifications from management and third-party environmental monitoring consultants.
The Credit Facility will fund anticipated costs of relocating one of Neo’s two plants that produce environmental emissions catalysts.
Neo’s current plant in Zibo, China will be relocated to a new facility (NAMCO) at a nearby industrial park that could increase Neo’s production capacity from 4,000 to 5,500 tonnes per year and will provide access to advanced municipal water treatment and drainage infrastructure. It also creates an opportunity for Neo to apply the latest best practices in manufacturing efficiency and to implement high standards of local environmental stewardship, including reduced air emissions, greater energy efficiency, and additional waste and water recycling.
In addition, the new NAMCO facility is expected to provide Neo with a manufacturing platform from which to launch potential new products that are under development. Neo is also exploring a variety of options for partnerships and structures regarding the light rare earth separations operations at the current plant.
The EDC financing of the NAMCO relocation and expansion will enable Neo to deploy capital to the Company’s larger growth strategies, which include expansion of its rare earth separations operations in Estonia and the possible construction of a new factory in Estonia to manufacture sintered neodymium-iron-boron magnets. These advanced magnets are used extensively in electric vehicle traction motors and demand for them from European and other automakers is rising rapidly.
“We are deeply appreciative of the support of Export Development Canada for this credit facility, as it provides us with the wherewithal to expand and improve our environmental catalyst business. This will strengthen our ability to provide our customers in Canada and other nations with superior environmental emissions catalyst products that reduce harmful vehicle emissions,” said Constantine Karayannopoulos, President and CEO of Neo. “This loan also provides Neo with greater flexibility to pursue our larger capital growth strategy and to respond to the rapidly growing global demand for value-added rare-earth-based products and magnets.”
“Neo’s expansion of its environmental catalyst business will offer innovative solutions to clients across a variety of sectors that will accelerate the reduction of harmful air emissions,” said Guillermo Freire, Acting Senior Vice-President, Mid-Market. “EDC is pleased to support Neo as it continues to build on its international growth strategy that enables the shift to a more sustainable global economy.”