Victorian forestry company Midway has announced plans to invest up to $8 million in two Western Australian biomass companies.
Under the deal, Midway will acquire Bunbury-based Softwood Logging Services for $5.5 million and invest $2.5 million for a 40 per cent stake in Biogrowth Partners.
The agreement also includes a call option for Midway to increase its stake in Biogrowth to 50 per cent, which is exercisable 12 months after the completion date.
Softwood, which was established in 1988, is a woodfibre and biomass harvesting, processing and logistics business.
With its head office in Bunbury, the company has operations throughout the south-west of the state.
Biogrowth is based at the same location and is a biomass procurement and marketing business which supplies woodfibre to the WA biomass market.
Biogrowth contracts Softwood for processing and logistics services.
The companies also share a founding investor, with Don Burmas serving as a director with both companies.
Midway managing director Tony Price said the acquisition was consistent with the company’s strategy.
“SLS provides Midway with access to equipment, management expertise and contracts for the harvesting and delivery of biomass and other forest products in south-west Western Australia,” he said.
“BGP also secures biomass resources, contracts with SLS for processing and logistics, and markets the processed biomass to contracted domestic customers.
“It will provide Midway with the opportunity to participate in the emerging biomass market in Australia and overseas.”
Shares in Midway finished down 3.59 per cent at $2.95 each today.
