Funding agreed for £60m wood chip factory

The London-based PLC has entered into agreements for the world’s first Tricoya wood chip manufacturing plant, which will be built at Saltend Chemical Park in Hull.

The project will be funded using a combination of debt and equity from BP, Medite, the Business Growth Fund and Volantis and debt from RBS.

Tricoya wood elements, which include chip, fibres and particles, are used in the production of modified wood panels, which can be used to clad buildings and also used for wall linings in swimming pools, make surfboards, tree houses and sound barriers.

Accsys chief executive Paul Clegg said production of Tricoya wood elements had to-date been on a small scale for market development feedstock derived from Accoya wood.

The firm has an Accoya factory in Arnhem in the Netherlands.

In the last five years Tricoya sales have significantly increased but the cost of producing Tricoya wood elements from chipped Accoya wood are approximately 50 per cent higher than the expected cost of producing the material on its own and Mr Clegg said the lack of a dedicated Tricoya factory has constrained sales.

The total cost of the 190,000 sq ft plant is expected to be approximately €68m (£58.8m).

Pre-construction engineering and design work for the Hull plant finished in 2016 and its construction is expected to be completed by early 2019.

The factory, which will create 30 jobs on completion, is expected to have an initial capacity of 30,000 tonnes of acetylated Tricoya chips per annum, enough to produce approximately 430,000 sq ft of Tricoya panel products.

The site is expected to break even at approximately 40 per cent design capacity. It is expected to take approximately four years to reach full capacity following completion after which there will be scope for expansion.

The modular design of the factory is expected to allow for an efficient expansion when market conditions dictate.

In a trading update yesterday, Accsys said its Accoya plant in Arnhem in the Netherlands was now running to close capacity, as expansion of the site continued to progress

The firm said it plans to raise £14m in a share placing, placing shares at 69 cents each in order to strengthen its balance sheet as it undertakes the two projects.

Mr Clegg said: “We are delighted to update our shareholders on these two transformational projects to secure new manufacturing capacity for Tricoya wood elements and additional capacity for Accoya solid wood. These developments will allow us to take advantage of the growing market opportunity for both Tricoya and Accoya which we believe to be substantial with demand continuing to grow for both products.

He added: “Our ongoing relationship with industry leaders, BP, Medite and Solvay Acetow, and new financial backing from BGF, Volantis and RBS, are a strong endorsement of Accsys’ unique expertise and technologies.

“As a result, we are extremely well placed to capitalise on the significant growth potential for the benefit of our shareholders.

“These strategic initiatives are underpinned by strong revenue and demand growth, announced in this morning’s trading update and we are excited about the transformational developments reflected in today’s announcements.”