ecoTECH Energy Group Inc. (OTCBB:ECTH), a renewable energy company, issued press yesterday that is extremely positive for its growth potential, but only scratches the surface of where the market capitalization of ecoTECH can be in the mid-term. In the announcement, ecoTECH noted that "its proprietary biomass energy and fresh food systems division has received a 5 year supply purchase contract of approx $12 million dollars per annum from one of Canada's largest supermarket chains."
The contract could be vastly expanded, as ecoTECH expects the facility to be able to generate $50 million in sales annually at full capacity. The $12 million dollar value is a minimum amount of purchases.
While this is stellar news for ECTH revenue – especially when coupled with a $36 million contract for its "Gar-Crete" system announced late in 2011 – an examination of the 8-K filing with the Security and Exchange Commission details a bit more about what could be in store for ecoTECH in coming years.
The regulatory filing shows that the new supply contract is with Overwaitea Food Group Limited Partnership (OWFG), a division of the Jim Pattison Group of Companies (JPG). Using its proprietary technologies in biomass energy production and fresh food propagation systems, ecoTECH will "provide a continuous supply of high quality Products on a timely basis that meet the buyer's needs and specifications, grown/produced through the Process at [ecoTECH's] McBride, British Columbia facilities." Further, the contract provides for ten further one-year term agreements at the end of the first five-year term. The products will be produced in a 22-acre, zero-emission facility fueled 24/7 by ecoTECH's biomass energy technology. From a funding standpoint, given the nature, size and scope of this deal, most major Canadian banks would relish the opportunity to be involved in any required funding for the new facility which will help revitalize an area that was once a thriving logging community.
The kicker to the announcement is the size and purchasing power of OWFG and JPG. The Jim Pattison Group of Companies is the third largest privately-held company in Canada with more than 33,000 employees across 455 worldwide locations and sales of more than $7.2 billion in 2010. Overwaitea Food Group operates more than 120 stores under the brands of Save-On-Foods, Overwaitea Foods, Urban Fare, Cooper's Foods, PriceSmart Foods and Bulkley Valley Wholesale. A $60 million contract is certainly formidable, but given the size of the grocery industry alone, ecoTECH has exponential headroom for vertical growth. The exposure and market footprint than can be created through such a high-profile client opens the door for even larger supermarket chains, such as the Kroger Company (more than $80 billion in sales last year), to potentially take notice of ecoTECH's patented technology and the value it presents.
This goes without mentioning the core competency of the biomass energy production technology and its countless applications as globally companies, governments and consumers drive towards "greener" sources of energy to cut our dependence of fossil fuels and slash pollution.
Sometimes a press release is just a press release. Other times it is more…much more.
The 8-K filing can be viewed at http://www.otcshowcase.com/ecotech-ecth-8-k-entry-into-a-material-definitive-agreement/.
----------------------------------------
Disclaimer: Neither http://www.otcshowcase.com nor its officers, directors, partners, employees or anyone involved in the publication of the website or newsletters (“us” or “we”) is a registered investment adviser or licensed broker-dealer in any jurisdiction whatsoever. Further, we are not qualified to provide any investment advice and we make no recommendation to purchase or sell any securities. The prior article is published as information only for our readers. otcshowcase.com is a third party publisher of news and research. Our site does not make recommendations, but offers information portals to research news, articles, stock lists and recent research. Nothing on our site should be construed as an offer or solicitation to buy or sell products or securities. This site is sometimes compensated by featured companies, news submissions and online advertising. Viper Enterprises, LLC (parent company of OTC Showcase) has received 15,000 shares of 144 restricted stock for journalism and distribution services from ecoTECH Energy Group, Inc. Please read and fully understand our entire disclaimer at http://www.otcshowcase.com/about-2/disclaimer.