Biofuels seeks cash after cost overruns

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The Independent Online

Biofuels Corporation, the company seeking to establish one of Europe's largest biodiesel plants, wants to raise an additional £33m from shareholders after cost over-runs.

The company said the extra money would also be used to start a second plant, without saying when that might happen.

Listed last summer at 75p, Biofuels is looking to raise the new funds at 230p. The open offer and placing is fully unwritten by the company's adviser, Collins Stewart.

Its shares closed yesterday at 300.5p, up 39p.

BioFuels said: "The company has sustained project delays as well as considerable cost over-runs arising both from additional capital and working capital costs and in relation to existing hedging arrangements. In determining the group's funding requirements, the board considers it prudent financial management to have a balance sheet sufficiently robust to mitigate a level of volatility in commodity prices as well as any unforeseen delays in achieving full commercial operation of the plant."

Sean Sutcliffe, brought in as chief executive in January from BG, said that the cost of the plant, in Teesside, had risen from £21m to £28m. It was 70 per cent complete and would open on time by July. It would be producing some 250,000 tonnes by September.

Biodiesel is made from rape seed and palm oil. The company raised £14m in the initial flotation.