RNS Number:7154C
Biofuels Corporation PLC
10 May 2006
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SECURITIES LAWS.
Biofuels Corporation plc
("Biofuels" or "the Company")
Producing on spec. Biodiesel and first deliveries made to customers
Extension of on-demand banking facilities
Placing to raise #7.9 million (the "Placing")
Biofuels, the AIM traded Company which owns and operates one of the largest
Biodiesel plants in Europe, capable of producing at least 250,000 tonnes of
Biodiesel per annum on a continuous process basis, is raising #7.9 million
before expenses (#7.3 million after expenses) through a non pre-emptive
conditional placing of 4,401,804 New Ordinary Shares (the "Placing Shares") at
180 pence per share (the "Placing Price"). The Placing is being undertaken with
existing and new institutional investors at the Placing Price by Biofuels'
Nominated Adviser and Broker, Collins Stewart.
The net proceeds of the Placing will provide both additional working capital as
the Plant continues to progress to production at the nameplate rate of 250,000
tonnes per annum and the financial platform for the implementation of the next
phase of the Company's growth strategy. With the Plant now operational the
Board considers it appropriate to proceed with its strategy and commence the
design of a second plant by way of the front end engineering design ("FEED").
The Company's Bankers continue to support the Group and have agreed to extend
their #92.9 million on-demand facilities for a further six months to 31 December
2006. The Bank has also agreed that the amount necessary to discharge the
previously announced fee of #2.275 million due on 30 June 2006 can be added to
the facilities, giving the Group increased on-demand facilities of #95.2 million
to 31 December 2006. The Directors believe these arrangements will provide the
opportunity for the Company to re-finance later in 2006, taking into account
requirements for a second plant, based on a longer track record of production
and sales. The net proceeds of the Placing combined with the Group's banking
facilities will enable it to continue to implement its strategy.
The Board considers the Placing to be in the best interests of the Company,
providing additional working capital and the funds necessary to undertake the
FEED for a second plant.
The Placing is conditional upon, amongst other matters:
* the Placing Agreement becoming unconditional in all respects and
not having been terminated in accordance with its terms; and
* Admission.
Placing Highlights
* #6.3 million of the net proceeds will be used to provide
additional working capital headroom and #1 million will be used for the FEED.
* The Placing Price represents a discount of approximately 10.7 per
cent to the closing mid market price of the existing Ordinary Shares on 9 May
2006 (the business day immediately preceding the publication date of this
announcement).
* The Placing Shares will represent approximately 8.9 per cent of
the Enlarged Issued Share Capital.
* The Group's Bankers have increased and extended their on-demand
facilities to #95.2 million and 31 December 2006 in return for a fee of #464,000
payable if the share price reaches 274p (subject to adjustment to reflect the
dilutive effect of future share issues and reorganisations of the Company's
share capital) on or before the third anniversary of Admission and a further fee
of #464,000 only payable if the facilities have not been repaid in full by 31
December 2006.
Financial position
The Company continues to operate within its banking facilities. However the
Board considers that the available working capital headroom is unacceptably
tight. The Company has provided cash to support the Energea contract under
which Energea are providing the core processing units of the Plant. In
addition, the construction cost of the Plant, forecast as #43 million in
December 2005, has increased to #45 million. Whilst Biofuels has implemented a
range of cash management initiatives to offset these additional outlays, there
is a need for a reasonable level of headroom going forward. The Board believes
the Placing will supply this headroom, whilst also providing the funds for the
FEED and will enable the Company to introduce further business efficiency
initiatives.
The Group has shipped 7,000 tonnes of on spec. Biodiesel to initial customers.
Further consignments are being planned in line with production forecasts and
customer schedules.
During April, the Plant was on-stream for over 80 per cent of the maximum time
available, operating at just under half nameplate capacity. In line with
previous announcements, the focus is now on ramping-up production over the next
few months to the nameplate capacity of 250,000 tonnes per annum.
Mike Buzzacott, recently appointed non-executive Chairman of Biofuels,
commented: "We are delighted with the progress the Company is making. The
largest Biodiesel plant in the UK, and one of the largest in Europe, has proven
24 hour production and is steadily moving towards achieving nameplate capacity.
We are also now shipping product to customers. This is an exciting stage in
the Company's development"
PLACING STATISTICS
Placing Price 180p
Number of Existing Ordinary Shares 45,118,048
Number of New Ordinary Shares being issued pursuant to the Placing 4,401,804
Number of Ordinary Shares in issue following the Placing 49,519,852
Placing Shares as a percentage of the Enlarged Issued
Share Capital 8.9 per cent
Approximate proceeds of the Placing (net of expenses) #7.3 million
Contacts:
Biofuels Corporation plc College Hill Associates Limited Collins Stewart Limited
Sean Sutcliffe Mark Garraway Nick Ellis
Bob Green Gareth David Philip P. Roe
Tel: 01642 371600 Tel: 020 7457 2020 Tel: 020 7523 8350
Biofuels Corporation plc
("Biofuels" or "the Company")
Producing on spec. Biodiesel and first deliveries made to customers
Extension of on-demand banking facilities
Placing to raise #7.9 million (the "Placing")
Introduction
Biofuels, the AIM traded Company which owns and operates one of the largest
Biodiesel plants in Europe, capable of producing at least 250,000 tonnes of
Biodiesel per annum on a continuous process basis, is raising #7.9 million
before expenses (#7.3 million after expenses) through a non pre-emptive
conditional placing of 4,401,804 New Ordinary Shares (the "Placing Shares") at
180 pence per share (the "Placing Price"). The Placing is being undertaken with
existing and new institutional investors at the Placing Price by Biofuels'
Nominated Adviser and Broker, Collins Stewart.
The net proceeds of the Placing will provide both additional working capital as
the Plant continues to progress to production at the nameplate rate of 250,000
tonnes per annum and the financial platform for the implementation of the next
phase of the Company's growth strategy. With the Plant now operational the
Board considers it appropriate to proceed with its strategy and commence the
design of a second plant by way of the front end engineering design ("FEED").
The Company's Bankers continue to support the Group and have agreed to extend
their #92.9 million on-demand facilities for a further six months to 31 December
2006. The Bank has also agreed that the amount necessary to discharge the
previously announced fee of #2.275 million due on 30 June 2006 can be added to
the facilities, giving the Company increased on-demand facilities of #95.2
million to 31 December 2006. These arrangements will provide the opportunity
for the Company to re-finance later in 2006, taking into account requirements
for a second plant, based on a longer track record of production and sales. The
net proceeds of the Placing combined with the Group's banking facilities will
enable it to continue to implement its strategy.
The Board considers the Placing to be in the best interests of the Company,
providing additional working capital and the funds necessary to undertake the
FEED for a second plant.
The Placing is conditional upon, amongst other things:
* the Placing Agreement becoming unconditional in all respects and
not having been terminated in accordance with its terms; and
* Admission.
The Placing Agreement contains warranties given by the Company with respect to
its business and the Group and certain matters connected with the Placing. In
addition, the Company has given an indemnity to Collins Stewart in connection
with the Placing and Collins Stewart's performance of services in relation to
the Placing. Collins Stewart is entitled to terminate the Placing Agreement in
specified circumstances.
The Placing Shares represent approximately 8.9 per cent of the Enlarged Issued
Share Capital. The Placing Shares will rank in full for any dividends and
otherwise equally with the Existing Ordinary Shares. It should however be noted
that the Directors do not currently intend to pay any cash dividends for the
foreseeable future as free cash is expected to be used to provide working
capital for the operational plant and contribute towards the funding of future
plants.
Application will be made to AIM for the Placing Shares to be admitted to
trading. Subject to Admission, it is expected that dealings in the Placing
Shares will commence on or about 16 May 2006.
Background
In March 2005, the Company raised approximately #30.6 million net of expenses,
based on the then expected cost for the construction of the Plant of #30 million
(including contingency).
On 17 November 2005, dealings in Ordinary Shares were temporarily suspended at
the Company's request pending the conclusion of discussions with the Group's
Bankers, as well as with equity providers, regarding the Company's ongoing
funding requirements. Agreement was reached with the Bank, subject to
shareholder approval, (which was obtained on 19 December 2005) on new
conditional on-demand debt facilities as described below. These facilities
allowed sufficient funding both to see the Plant through to full-scale
production and enabled the Group to repay its commodity, foreign exchange and
interest rate hedge facilities.
On 2 December 2005, the Company reported that additional costs of #13.0 million
would be incurred in relation to the completion and commissioning of the Plant.
The Board further believed at that time that the Group required #11.7 million of
additional working capital (taking into account the loss of revenue as a result
of the later than expected commencement of production and potential penalties
for late delivery). These additional sums, as well as Bank fees of #8.5
million, meant that the Group required further funding of #33.2 million. The
Group was also provided with #37.9 million to repay in full the commodity,
foreign exchange and interest rate hedge facilities. This increased the Group's
bank funding by #71.1 million in aggregate which, together with the Group's
existing facility, took its total bank funding to #92.9 million. Under the
terms of these facilities a further fee of #2.275 million would be payable to
the Bank at the end of June 2006 if all of the outstanding facilities had not
been repaid by that date. As set out earlier in this press announcement, the
Company's Bankers have agreed to extend their #92.9 million on-demand facilities
to 31 December 2006. The Bank has also agreed that the fee of #2.275 million,
referred to above and due on 30 June 2006, can be added to the #92.9 million
facilities, giving the Group increased facilities of #95.2 million to 31
December 2006.
On 28 February 2006, the Board announced that, following the successful
completion of a comprehensive commissioning programme, the first Biodiesel had
been produced at the Plant. Efforts were focussed on calibrating the Plant
against the required quality and throughput specifications and then, in turn,
progressively ramping up to the nameplate rate of 250,000 tonnes per annum.
On 27 March 2006, the Board of Biofuels appointed Mike Buzzacott as non-
executive Chairman. A qualified accountant, Mr Buzzacott spent 35 years at BP
plc where he held a broad range of senior management positions across Europe and
Asia in the finance, downstream, nutrition and chemicals areas. He retired from
BP in 2004 as Group Vice President, Petrochemicals.
On 3 May 2006, the Board announced the Group's first shipments of on spec.
Biodiesel to initial customers and that further consignments were planned in
line with production forecasts and customer schedules. During April 2006, the
Plant was on-stream for over 80 per cent of the maximum time available,
operating at just under half nameplate capacity.
On-Demand Facilities
The Bank facilities as agreed in December 2005 and running to 30 June 2006 have
been amended as follows:
* Existing #92.9 million facilities extended to 31 December 2006
* Facilities increased by #2.275million to cover the previously
announced fee due at 30 June 2006, to give total facilities of #95.2 million
* Additional success fee of #464,000 to be paid to the Bank if the
share price reaches a strike price of 274p on or before the third anniversary of
Admission. The strike price is subject to adjustment
* A further fee of #464,000 payable on 31 December 2006 if the
facilities have not been repaid in full by that date
This total funding is provided by the Bank by way of two conditional, on-demand
debt facilities. As is normal with on-demand facilities, irrespective of
compliance with the covenants, the Bank has the right to demand immediate
repayment of the amounts outstanding under the facilities at any time.
The Placing
Under the Placing, the Company is proposing to allot and issue 4,401,804 New
Ordinary Shares (the "Placing Shares"), at the Placing Price. The Placing will
raise approximately #7.9 million (approximately #7.3 million, net of expenses).
The Placing Price represents a discount of approximately 10.7 per cent to the
closing middle market price of an Ordinary Share on 9 May 2006 (the latest
practicable date prior to the publication of this announcement).
The Placing Shares represent approximately 9.8 per cent of the Company's issued
share capital immediately prior to the Placing.
The Placing Shares will not be offered generally to Shareholders, whether on a
pre-emptive basis or otherwise. The Directors believe a rights issue or open
offer would have involved disproportionate cost. The Board considers securing
comfort on the increased working capital headroom which will be provided by the
Placing and funding for the FEED to be priorities for the Company and,
therefore, consider the Placing to be in the best interests of Shareholders as a
whole.
The Placing Shares represent approximately 8.9 per cent. of the Enlarged Issued
Share Capital. The Placing Shares will rank in full for any dividends and
otherwise equally with the Existing Ordinary Shares. It should however be noted
that the Directors do not currently intend to pay any cash dividends for the
foreseeable future as free cash is expected to be used to provide working
capital for the operational Plant and contribute towards the funding of future
plants.
The Placing is conditional upon, amongst other things:
* the Placing Agreement becoming unconditional in all respects and
not having been terminated in accordance with its terms; and
* Admission.
All of the 4,401,804 Placing Shares have been conditionally placed with
institutional investors.
The Placing is to be effected on behalf of the Company by Collins Stewart, on
the terms of the Placing Agreement. In consideration of their services in
connection with the Placing, the Company will pay to Collins Stewart a
commission based fee of #316,930.
The Placing Agreement contains warranties given by the Company with respect to
its business and the Group and certain matters connected with the Placing. In
addition, the Company has given an indemnity to Collins Stewart in connection
with the Placing and Collins Stewart's performance of services in relation to
the Placing. The Placing Agreement may be terminated by Collins Stewart at any
time before Admission for, amongst other matters, a material breach by the
Company of the terms of the Placing Agreement or the warranties contained in it.
Financial position
The Company continues to operate within its banking facilities. However the
Board considers that the available working capital headroom is unacceptably
tight. The Company has provided cash, to support the Energea contract under
which Energea are providing the core processing units of the Plant. In
addition, the construction cost of the Plant, forecast as #43 million in
December 2005, has increased to #45 million. Whilst Biofuels has implemented a
range of cash management initiatives to offset these additional outlays, there
is a need for a reasonable level of headroom going forward. The Board believes
the Placing will supply this headroom, whilst also providing the funds for the
FEED and will enable the Company to introduce further business efficiency
initiatives.
The Board expects there to be significant carried forward tax losses and
allowances available to the Company which will mitigate against future
corporation tax liabilities.
As announced on 3 May 2006, the Group has shipped 7,000 tonnes of on spec.
Biodiesel to initial customers. Further consignments are being planned in line
with production forecasts and customer schedules. The Group has contracted
sales of 80,000 tonnes in place for May to December 2006.
During April the Plant was on-stream for over 80 per cent of the maximum time
available, operating at just under half nameplate throughput. The glycerine
plant is currently being commissioned. In line with previous announcements, the
focus is now on ramping-up production over the next few months to the nameplate
capacity of 250,000 tonnes per annum.
The Market for Biodiesel
The European market for Biodiesel has grown by over three times between 2002 and
2005, reaching 3.2 million tonnes according to data published by the European
Biodiesel Board. Within this, Germany constitutes the largest market,
representing over 1.5 million tonnes in 2005. The European market is forecast
to continue to grow strongly, with independent market research predicting a
level of 9 million tonnes by 2010.
This market is underpinned by fiscal measures to support the European Biofuels
Directive targets for biofuels to contribute 2 per cent of transport fuels in
2005 and 5.75 per cent by 2010. The Directors believe that European support for
biofuels will continue, with an increasing move towards obligation regimes to
complement or ultimately replace existing fiscal support measures. The Board
believes that these moves will be made in a way which ensures that Biodiesel
remains attractive to consumers. In the UK, the Government has announced
further details of the proposed Renewable Transport Fuels Obligation. The Board
believes that these will give strong incentives for UK suppliers to comply with
the targets set within this regime of 2.5 per cent of biofuels by 2008/9 rising
to 5 per cent in 2010/11. At the 5 per cent level in 2010/11 this would
represent a Biodiesel market of over 1 million tonnes per annum.
Biofuels is targeting sales to distribution and refinery customers in the UK and
mainland Europe. Considerable interest is being shown by existing distributors
of diesel fuel, as well as by refinery customers. In addition, there are active
brokers and trading houses engaging in an 'over the counter' market for
Biodiesel. Overall, the Group has contracted sales of 80,000 tonnes for May to
December 2006 and intends to seek to establish a reasonable proportion of
longer-term sales contracts in due course.
Raw Materials
The overall supply base for vegetable oil feedstocks is growing. The policy of
Biofuels is to purchase feedstocks, comprising soya, palm and rapeseed oil, with
high quality counterparties. Purchasing arrangements are in place for initial
production requirements, with the Company's strategy to put in place longer-term
arrangements in due course. The Company is actively involved in discussions
with producers, government organisations and NGOs to ensure that feedstock
sustainability issues are adequately addressed.
The Directors consider it important that commodity and currency risks are
adequately managed in a prudent fashion. The Group will seek to manage
commodity risks in the short to medium term by selectively fixing contract
prices for both raw materials and sales. The Group will look to mitigate
currency exposure by seeking a proportion of US$ linked sales and the placing of
forward currency transactions to match forecast sales and purchase contracts.
In the longer term the Directors believe that a move towards obligation
structures is likely to drive a linkage between feedstock and Biodiesel prices
thereby reducing both commodity and currency risks.
Mike Buzzacott, recently appointed non-executive Chairman of Biofuels,
commented: "We are delighted with the progress the Company is making. The
largest Biodiesel plant in the UK, and one of the largest in Europe, has proven
24 hour production and is steadily moving towards achieving nameplate capacity.
We are also now shipping product to customers. This is an exciting stage in the
Company's development"
Appendix I
DEFINITIONS
The following definitions apply throughout this announcement unless the context
requires otherwise:
"Admission" the admission to trading on AIM of the Placing Shares becoming
effective in accordance with the AIM Rules which is expected to
be 16 May 2006
"AIM" means the market of that name operated by the London Stock
Exchange
"AIM Rules" the rules applicable to AIM companies and their nominated
advisers issued by the London Stock Exchange from time to time
"Bank" or the "Company's Bankers" Barclays Bank PLC
"Biodiesel" clean burning, biodegradable, alternative fuel, largely
produced from renewable resources (vegetable fats), containing
no petroleum and essentially free of sulphur and aromatics
"Board" or "Directors" the directors of the Company namely Mike Buzzacott, Clare
Spottiswoode, Geoff Brady, Sean Sutcliffe, Bob Green and
Richard Nickels
"Collins Stewart" Collins Stewart Limited of 9th Floor, 88 Wood Street, London
EC2V 7QR
"Company" or "Biofuels" Biofuels Corporation plc
"Energea" Energea Umwelttechnologie GmbH
"Enlarged Issued Share Capital" the aggregate of Existing Ordinary Shares and the Placing
Shares
"Group" or "Biofuels Group" the Company and its subsidiaries
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" The 4,401,804 new Ordinary Shares of 1p each in the capital of
the Company
"Ordinary Shares" 45,118,048 existing Ordinary Shares of 1p each in the capital
of the Company
"Placing" the conditional placing by Collins Stewart of the Placing
Shares on behalf of the Company on the terms of the Placing
Agreement
"Placing Agreement" the conditional agreement dated 10 May 2006 between (i) Collins
Stewart (ii) the Company relating to the Placing
"Placing Price" 180 pence per Placing Share
"Placing Shares" the 4,401,804 New Ordinary Shares comprised in the Placing
"Placees" the various institutions who have conditionally agreed to
subscribe New Ordinary Shares at the Placing Price
"Plant" the first production plant located at Seal Sands, Teesside,
designed and manufactured for the Group
"Shareholders" holders of Ordinary Shares
"tonnes" metric tonnes
"UK" or "the United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"United States of America" or "United the United States of America, its territories and possessions,
States" or "US" or "USA" any state of the United States of America and the District of
Columbia and all other areas subject to its jurisdiction
Appendix II
1. DIRECTOR'S RESPONSIBILITIES
The directors of the Company, whose names appear on page 10 of this press
release, accept responsibility for the information contained in this document
including individual and collective responsibility for compliance with the AIM
Rules. To the best of the knowledge and belief of the Directors (who have taken
all reasonable care to ensure that such is the case), the information contained
in this document is in accordance with the facts and does not omit anything
likely to affect the import of such information. In connection with this
document no person is authorised to give any information or make any
representation other than as contained in this press release.
2. ELIGIBILITY TO PARTICIPATE IN THE PLACING
Members of the general public are not eligible to take part in the Placing. This Announcement and the Appendix and the
terms and conditions set out herein, in so far as they constitute an invitation or inducement to participate in the
Placing, are directed only at persons whose ordinary activities involve them in acquiring, holding, managing and
disposing of investments (as principal or agent) for the purposes of their business and who have professional experience
in matters relating to investments and who fall within article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2001, as amended, (the "Order") or are persons falling within article 49(2) (a) to (d)
("High Net Worth Companies, Unincorporated Associations, etc") of the Order or to persons who are existing members of
Biofuels falling within Article 43(2)(a) ("members and creditors of certain bodies corporate") of the Order or to whom
it may otherwise lawfully be communicated (all such persons together being referred to as "Relevant Persons"). This
Announcement and the Appendix and the terms and conditions, in so far as they constitute an invitation or inducement to
participate in the Placing, must not be acted on or relied on by persons who are not Relevant Persons. Any investment or
investment activity to which this Announcement relates is available only to Relevant Persons and will be engaged in only
with Relevant Persons. Neither the Announcement and the Appendix nor the terms and conditions constitute an offer for
sale or subscription of any securities of the Company.
The making of an offer in certain jurisdictions, or to residents who are citizens of certain jurisdictions ("Foreign
Shareholders"), may be restricted bylaws of the relevant jurisdictions. Foreign Shareholders should inform themselves
about and observe any such applicable legal requirements in their respective jurisdiction.
PRIOR TO INVESTING IN THE PLACING SHARES OR CONDUCTING ANY TRANSACTIONS IN THE
PLACING SHARES, INVESTORS ARE ADVISED TO CONSULT PROFESSIONAL FINANCIAL & LEGAL
ADVISERS REGARDING THE ABOVE.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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