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(Sharecast News) - Sabien Technology Group outlined plans for a deeper strategic tie-up with South Korea's City Oil Field (COF) on Wednesday, alongside confirmation that COF's first commercial regenerated green oil production plant had been successfully commissioned.
The AIM-traded provider of carbon dioxide and energy-reduction technologies said the RGO plant at the Wave Jeongeup facility in Korea started full operations on 18 November, with Sabien executives in attendance alongside government agencies, commercial partners and investors.
Following the visit, Sabien, b.grn Group and COF agreed to advance their May 2023 memorandum of understanding into a proposed strategic agreement that would cement their collaboration.
Under the PSA, Sabien said it would acquire a minority equity interest in COF, while COF would take a stake in Sabien.
Sabien's existing exclusive UK sales agency agreement with COF would be extended for a further 10 years and expanded to cover additional territories outside Korea, subject to contract and regulatory approvals.
The parties also intended to explore international trade opportunities for sustainable oil products from the Jeongeup plant for sale into the UK and EU.
Executive chairman Richard Parris said the deal would closely align the two companies.
"The proposed strategic agreement is expected to bind Sabien and COF in joint enterprise to ensure mutual success," he said.
"Having witnessed first-hand the quality of engineering and operational performance at the Jeongeup RGO production plant, the board of directors of Sabien is confident in COF's technology and its global potential."
Sabien added that, against the backdrop of more than 400 million tonnes of plastic produced globally each year and less than 10% currently recycled, it aimed to help deliver "scalable, sustainable, and commercially viable solutions to this global environmental challenge."
The company said it had conditionally agreed to acquire 687,275 COF shares, representing about 1.12% of COF's enlarged share capital, for 0.6m.
It said consideration would be satisfied through the issue of 5,054,760 new Sabien ordinary shares at a deemed price of 11.87p, reflecting the company's five-day volume-weighted average price following its 2 October announcement.
The shares would be issued on a non-pre-emptive basis under existing authorities granted at the 2021 AGM.
Completion of the PSA was conditional on mandatory registrations with relevant Korean government bodies and the completion of a foreign corporate investment into COF by Saudi Arabia's Petroleum Environmental Development Company at a COF valuation of $72.2m.
Sabien said it did not control the timetable for those processes and cautioned that there could be no certainty over the timing or completion of the PSA.
COF reported audited total assets of KRW 11.36bn and profit before tax of KRW 696.9m for 2024.
Once the new shares are issued, COF would hold about 15.87% of Sabien's enlarged share capital.
The stake of Parris and his closely related parties would be diluted to roughly 22.42%, although their holding would remain at 7,140,175 shares.
Subject to the conditions being met, Sabien said it would apply for admission of the new shares to trading on AIM, after which it would have 31,848,245 ordinary shares in issue, all with voting rights.
At 1347 GMT, shares in Sabien Technology Group were up 21.43% at 8.5p.
Reporting by Josh White for Sharecast.com.