30/04/2008 - 14:48

ARFuels pitches rights issue at 2.5 cents

30/04/2008 - 14:48

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Struggling biofuels company Australian Renewable Fuels Ltd is planning to raise $3.1 milion through a rights issue pitched at the deeply discounted price of 2.5 cents per share.

Struggling biofuels company Australian Renewable Fuels Ltd is planning to raise $3.1 milion through a rights issue pitched at the deeply discounted price of 2.5 cents per share.

ARFuels said the rights issue would be fully underwritten by Patersons Securities subject to completion of formal documentation.

"The company is presently finalising an underwriting agreement and a transaction specific prospectus which will include full details of the rights issue," it said in a statement.

The pricing of the rights issue compares with the company's last share price, prior to calling a trading halt last week, of 6.5 cents.

The rights issue will be on the basis of five new shares for every seven shares held, and will see the issue of 123 million new shares - compared with 172 million shares currently on issue.

The proceeds from the rights issue will be used to retire existing bank debt and augment working capital.

ARFuels built two biofuel plants near Bunbury and Adelaide at a cost of $46 million but was forced to close them after being adversely affected by tax changes and rising feedstock costs.

It is planning to sell the Adelaide plant and surplus land near the Bunbury plant.

ARFuels said any future production would be on a 'job lot/cost plus' basis.

 

 

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