Holista Colltech enters joint venture with SCC for ovine nano-collagen facility in Western Australia

Holista Colltech 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.

Under the agreement, 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, Holista will make payments equivalent to 3 per cent 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 per cent. The option can be exercised 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. The 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.

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.

Holista will retain ownership of all pre-existing and newly developed intellectual property, with the JV granted a licence to utilise the technology for its business. The JV will pay Holista a royalty of 8 per cent of gross sales, capped at 20 per cent of the JV’s profit before tax.

The company stated that the joint venture represents a step in the commercialisation of Holista’s collagen technology and supports its strategy to establish production capabilities and expand into international markets.

The Collie facility is expected to provide a platform to produce nano-collagen products for nutraceutical, food, cosmetic and biomedical applications.

SCC is expected to support the JV’s market development activities through its regional network and experience in distribution and consumer markets to facilitate product commercialisation.

The company stated that there are no material conditions precedent to the Joint Venture Agreement. It added that further updates on development milestones and timing of commissioning will be provided in due course. The announcement has been approved by the Board of Holista Colltech Limited.