The strategic move sees Midway - which until now has been a woodfibre processor that supplies international paper markets - transition into the growing bioenergy renewables sector, as the company actively sets its sights on stockfeed for energy generation.
Midway plans to buy a 100% interest in Softwood Logging Services, a Western Australia-based woodfibre, biomass harvesting, processing and logistics company, for A$5.5 million in a move that will enter into the domestic biomass harvesting market, and provide the company with access to equipment.
In a separate transaction Midway has its eyes set on a $2.5 million acquisition to acquire a 40% interest in Biogrowth Partners, a biomass procurement and marketing business which supplies woodfibre to the domestic biomass market, securing contracts for Softwood Logging Services.
"The acquisition is consistent with Midway's strategy of growing earnings by leveraging our existing core capability including processing, marketing, harvesting and plantation management," Midway managing director Tony Price said.
"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.
Midway conducted a A$50 million capital raise last month which included a placement and share purchase plan to provide capital to financially secure the company over the transaction period.
Both investments are expected to be earnings accretive in the 2020 financial year.
Midway's primary business until now has been the purchasing, processing and exporting of woodfibre to Chinese and Japanese pulp and paper markets, the company's strategic growth into the energy sector comes as the International Energy Agency identifies modern bioenergy as the biggest growth area in the renewable energy sector.
Energy derived from biomass (agricultural residues, crops, and waste) to generate electricity, heat and liquid fuels for transport, currently makes up about 50% of the world's renewable energy supply.
Midway was trading down 3.5% at $2.95 per share this afternoon.
