South Perth-based biodiesel producer Australian Renewable Fuels Ltd has undertaken a share placement and rights issue to raise $14.8 million for infrastructure development of the company’s production facilities in Adelaide and Picton.
The company will issue 9 million shares at 35 cents each to sophisticated investors, as well as 9 million placement options to acquire shares at 60 cents each by April 2009, to raise nearly $3.2 million before costs.
The rights issue will also allow shareholders to purchase 33.3 million shares and the same number of free-attaching options, to raise nearly $11.7 million, on the basis of one share for every four already held.
Funds generated will be used for general working capital and to retire debt.
Company secretary Max Ger told WA Business News the rights issue was intended to raise capital for additional infrastructure at the production facilities, while the placement to sophisticated shareholders would raise funds to retire bank debt, due for payment at the end of the month.
Earlier this week, ARF announced it had reached production and volume requirements over a 30 day period, which will enable the company to qualify for its final two capital grants payments, amounting to nearly $5.4 million.
ARF’s capital raising coincides with NSW-based Australian Biodiesel Group Ltd announcing a conditional non-renounceable rights issue this week, to raise $15.9 million.
Other players in the biofuels sector have downgraded their activities in recent months, due to increasing production costs and lack of security of stock supply.
Gull Petroleum has put its proposed $18 million Kwinana-based biodiesel plant on hold due to concerns about market viability.
Gull’s chief executive Wayne Ferrell said the demand side had failed to develop as quickly as the company had hoped, particularly beyond the retail network.
Mr Ferrell said there were suggestions within the industry the federal government’s taxation changes last year had reduced the commercial attractiveness of biodiesel for some customers.
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