This report is published by Research Dynamics, an independent research boutique


Upscaling to 200 million Airopack dispensers annually

Manufacturing capacity set to be doubled

Airopack is on track to double its manufacturing capacity at the Waalwijk plant. The state-of-the-art plant in Waalwijk, Netherlands was set up in December 2016 by ATG with an initial annual capacity of 80 million pieces of Airopack. The company is now targeting to increase the installed capacity to 100 million pieces annually by end 2017, with a further modular expansion of installed capacity to 200 million pieces annually over the course of 2018. The increased capacity will help the company to fulfill increasing demand for its patented and unique dispenser.

New financing secured

Airopack has secured additional financing to fund its expansion plans. The financing comes in a combination of (i) a capital increase with expected net proceeds of approximately EUR 11.7 million, (ii) an additional EUR 10 million debt facility provided by funds managed by affiliates of Apollo Global Management, and (iii) asset-based financing, including lease and factoring provided by Rabobank and KBC, respectively.

ATG is doing a private placement of 1,228,955 registered shares with a nominal value of CHF 5.00 per share and an issue price of CHF 10.65 each. The issue has been fully subscribed by investors, with Apollo Funds participating in the private placement pro rata for their current shareholding. The proposed shares will be issued from the authorized capital and will be eligible for dividends from next year. ATG is expecting the private placement and listing of the new shares to be completed in the first half of July 2017.

Conclusion

The company is in a ramp up phase and is on track to meet its growth targets. With this investment, Airopack is confirming its ability to bring sustainable packaging innovations to the market at competitive costs, becoming the new standard in planet friendly packaging solutions. By end of 2018 we expect the company to be able to fully utilize the expanded production capacity of its plant in the Netherlands. There are no material changes in our income statement projections for the company as we had already accounted for a planned expansion in our model.

Valuation

We remain optimistic about the growth prospects of Airopack. The company has promising plans and aggressive strategies in place to achieve the specified targets, along with a global financing partner. We expect Apollo to continue to support ATG in its future endeavours to expand its production capacity and also in opening new facilities to meet the growing demand for Airopack's products. There is no material change in our financial projections for the company as we had already accounted for a planned expansion in our model. Based on a Discounted Cash Flow (DCF) approach, we value Airopack at CHF13.5 per share, which is lower than our previous estimate of CHF14.3 per share. The decrease is due to the increase in the number of shares outstanding following the recent private placement of shares.