Holista Colltech is pleased to announce that it has entered into a binding Joint Venture Agreement with Swang Chai Chuan (SCC) for the funding, development and operation of an ovine nano-collagen production facility in Collie, Western Australia.
The Joint Venture (JV) will operate through Ovicoll Pty Ltd, with an initial ownership structure of 50:50 between Holista and SCC.
SCC will contribute RM5,000,000 (approximately A$1.6 million) to fund commissioning and initial working capital requirements of the JV.
As part of the commercial terms of the JV, Holista will make payments equivalent to 3 percent per annum on SCC’s initial funding contribution for a period of two years.
Holista retains a contractual option to increase its interest in the JV to 75%, exercisable between the second and fifth anniversaries of SCC’s initial capital contribution, based on a pre-agreed valuation methodology.
In connection with the JV, Dr. Rajen Manicka, a substantial shareholder of the Company, has provided a personal guarantee in favour of SCC in respect of certain financial obligations of the JV. This guarantee is secured by the shares he holds in Holista and is provided in his personal capacity. The guarantee does not constitute an obligation of the Company.
Operations and governance
Holista will be responsible for the day-to-day management and operation of the JV. The Board of Ovicoll Pty Ltd will comprise an equal number of directors appointed by Holista and SCC.
Intellectual property and commercial terms
Holista will retain ownership of all pre-existing and newly developed intellectual property, with the JV granted a licence to utilise this technology for its business.
The JV will pay Holista a royalty of 8% of gross sales, capped at 20% of the JV’s profit before tax.
Strategic rationale
The Joint Venture represents a significant step in the commercialisation of Holista’s collagen technology and supports the Company’s strategy to establish scalable production capabilities and expand into international markets.
The Collie facility is expected to provide a platform to produce high-value nano-collagen products for use in nutraceutical, food, cosmetic, and biomedical applications.
SCC is expected to play an active role in supporting the Joint Venture’s market development activities, leveraging its regional network and experience in distribution and consumer markets to facilitate product commercialisation.