Boon Sim:
John, we actually looked at earnings multiple, because we as an investor always want to make sure that we invest in companies that are profitable. The metric
that we use is EBITDA, which is what typically people use, which is operating cash, and what we did was we took the 2026 earning cashflow ... Now, the company, by the way, are starting in 2022. Plant one is up and running, so theyre already
selling products, but just a smaller plant, and by mid-2025, the bigger plant comes online, and that plant also throws out a massive amount of cash. We thought 2026 was the right metric year, because
thats a full year for the big commercial plant, to be fair to these guys, and thats how investors typically look at it.
Boon Sim:
We took the full year of 2025 costs, earnings, everything, the whole kitchen sink, we took that number and we applied, I would say, a fairly modest multiple 20
to 25 times EBITDA, which is where all the specialty chemical companies are trading today, and then we discount that value back to the present using a 20% discount rate. We didnt use some ultra high multiple, we never used some revenue
multiple and said, Gee, lets just base this on revenue multiple. Its a fairly typical way of doing it, nothing too exciting.
Boon
Sim:
Now, whats interesting about this deal, which Ive spoken to a lot of investors, the way to look at this deal is that, one, because the
technology is proven, youre really not taking on technology risks. Theres no, Gee, does the plant work or the product work? All that is proven, theres also no, what we call, market risk, in a sense thats no term
risk because the market is there, so its not dependent on consumers actually adopting the product. Its not like, for example, EV. You need consumers to be comfortable with charging taking three hours, or the limitation on driving the car
is 250 miles, so theres no S adoption curve, so the term is really no risk.
Boon Sim:
The real risk youre taking is really construction risk, which we know is not insignificant, but its not technology based. Based on that, you
potentially could get what I would call venture like returns, which could be five to 10X your return while taking on construction risks. We think that the risk/reward is balanced. Im not saying to people theres no risk. Theres
always risks in what you do, even when youve cross the road, theres risks, but I think the return here, you will get venture like returns while taking on execution risk.
John Jannarone:
I think thats a good way [crosstalk
00:26:42]. The technology is there, and theres no doubt about that, its just a matter of scaling it out and reproducing whats already being done. Can we talk about, and I dont want to go too far into this, but gentleman, we
talked about this the other day, and I find it really interesting, recycling. Does recycling work, and how do origin materials products fit into that situation? One Things are being used, do they need to be recycled? What happens if theyre
not?
John:
Its obviously an important sort of
temporal topic. I think generally speaking, recycling is one of the best answers that we have, and yes, technically of course it works. The question is, can you get the material actually to the point where it can be recycled, and are you making
something out of a material which is generally recycled? The reason why we went after PET first is, were really solving the front end, which is when you make materials, you emit carbon. We thought if we can bring our platform to PET, you can
take PET and you can make it so that its carbon negative, instead of emitting carbon when its produced, but theres the end of life consideration as well for all materials, not just plastics.
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