Cash-strapped biodiesel producer Australian Renewable Fuels plans to raise over $2 million, underwritten by a major shareholder, as it acknowledges it has continued to struggle to generate cash flow.
The company today announced it will raise $2.25 million through a two-for-three rights issue, fully underwritten by shareholder Wasabi Energy and partially sub-underwritten by Australian Enterprise Holdings (AEH) and Rentiers.
Shares will be priced at one cent each.
The rights issue comes on the back of two recent private placements, one with AEH for $154,068 and Wasabi for $273,780.
Australian Renewable Fuels (ARFuels) has had to close down two of its biodiesel plants after being squeezed by rising costs and falling biofuel prices and recently had its Fortescue Metals Group contract terminated.
"During the past year, the Company has continued to struggle with basic cash flow, and therefore has not been able to reach anything other than small production amounts, although the quality of the product has been well accepted in the market," ARF said.
At the end of April, the company's cash position was negative $726,000.
ARFuels said will use the funds from the rights issue to replenish working capital and seek alternate lower cost feed stocks.
Shares in ARFuels closed down 0.2 cents to 1.6 cents today.
