Ticker: CMC.CN / CWSFF
Listings: Canadian Securities Exchange / US OTC / Frankfurt
Website:https://www.cielows.com/
Market Cap: 299 MCAD at time of publication
Share price: 0,78 CAD at time of publication
Industry: Converting waste to renewable fuel
The land has a site built on it by a global construction and fabrication company from Belgium. The site includes “a 31,750 sq ft building and 35 acres that is graveled and improved, including fence, power and a yard compacted to 10 tons per square foot. The Land was developed in 2015 for approximately CDN$21M in the Alberta Industrial Heartland, Canada’s largest hydrocarbon processing region” . Management of Cielo emphasizes that the site has advantages in the global market such as access to global markets through the two largest railway lines in Canada and pipelines to deliver fuel directly to their off-take clients. A large part of construction is also as mentioned already built which will make the process of completing the plant more time efficient and likely ahead of the normal time plan.
The purchase is priced at 13 MCAD . The press release states the financing as follows:
“Cielo is also pleased to announce that it has accepted a binding term sheet for the financing of the balance of the purchase of the Land. First Choice Financial (“FCF”) has agreed to deliver a loan to the Company of $12,000,000 for the purchase (the “Loan”). The Loan will mature after 2 years and is subject to simple interest at a rate of 6% per year, payable monthly throughout the term of the Loan and can be extended by the lender. Cielo will also issue 12,000,000 non-transferable bonus warrants to FCF, exercisable for a period of 36 months at an exercise price of CAD $1.00 per share. Cielo will be entitled to repay the Loan at any time without penalty. Other than certain expenses of FCF associated with the Loan, no additional fees or commissions will be payable to FCF or any finders.
The Loan will be secured by all of the assets of the Company, including charges against the land and facilities in Fort Saskatchewan and Aldersyde. The Loan is also subject to certain customary conditions. Closing is anticipated to coincide with the completion of the purchase of the Land.”
Don Allan, CEO of Cielo Waste Solutions stated in the press release , “We are pleased to have secured this land, which is in proximity to “Refinery Row”, a nickname given to this location in Fort Saskatchewan because of all the major blending refineries that we believe will be the primary customers buying our fuel for mandated renewable blending requirements in Canada. With the amenities and infrastructure in place, we believe Cielo will have the ability to build our second 100% owned facility in a timely manner”. Mr. Allan continued: “We believe the debt financing is favourable and allows flexibility for early payout. We are very pleased with FCF’s term sheet and we appreciate their belief and support in Cielo. We will continue our focus on installation of the desulfurization equipment and increased production on our Aldersyde facility and begin the building of this new plant as per our projected timelines. Once both facilities are operating, the Company is expected to enjoy a significant increase in revenue and earnings and paves the foundation for future growth.”
ESG comment: We see the purchase of land as a great agreement that will accelerate Cielo’s expansion, especially when we keep in mind that a large part of the construction is already built. This is a huge step into building their second 100% owned facility. Something that may not be obvious to everyone is that getting a 6% interest rate loan for a small revenue company is very well done. And while there are warrants attached they are given at 25% higher than market price today and once exercised it also puts ANOTHER $12M into the company’s bank accounts.
We own shares of this company personally.
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