16/10/2006 - 15:28

Jupiter pulls plug on $75m biofuels spin-off

16/10/2006 - 15:28

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Less than two weeks after launching a $75 million capital raising, West Perth-based oil and gas explorer Jupiter Energy Ltd has pulled the pin on a float of its biofuels subsidiary, citing a lack of activity in the sector.

Jupiter pulls plug on $75m biofuels spin-off

Less than two weeks after launching a $75 million capital raising, West Perth-based oil and gas explorer Jupiter Energy Ltd has pulled the pin on a float of its biofuels subsidiary, citing a lack of market interest in the sector.

An announcement from the company indicates its belief that investor sentiment had shifted in recent weeks, and that the Jupiter Biofuels project should not be listed as a separate entity.

Jupiter Energy has maintained its commitment to finding alternative funding sources for the project, within the existing company structure.

This news comes after the August withdrawl of a share offer by Brisbane biofuels company Global Ethanol Holdings' worth $470 million, and an announcement in September that Perth-based Australian Renewable Fuels had made a loss of $3.5 million.

 

 

The full text of a company announcement is pasted below:

As shareholders should be aware, Jupiter Energy Ltd (the Company) is currently promoting a Prospectus for its 100 per cent owned subsidiary Jupiter Biofuels Ltd. The Company released an update on the progress of the planned capital raising on 12 October 2006 and advised that if there was a decision to pursue an alternative funding strategy for the Jupiter Biofuels project, it would communicate this to the market.

Investor sentiment towards the biodiesel sector has shifted significantly in recent weeks and whilst the investment community acknowledge that the Jupiter Biofuels business model is robust and its financial forecasts appear conservative when compared to other similar IPO's, there is an overwhelming view that the Jupiter Biofuels project should remain within the Company, not in a
separately listed Jupiter Biofuels Limited, and therefore that the required fund raising should be carried out directly through the existing Jupiter Energy ASX listed structure.

On this basis, the Board has resolved, with agreement from Lead Broker Bridges Financial Services Pty Ltd (Bridges), to:

  • Withdraw the Jupiter Biofuels Limited Prospectus with no financial penalty due to Bridges from Jupiter Biofuels.
  • Withdraw the resolution approving the In-specie distribution of Jupiter Biofuels from Jupiter Energy at the upcoming Annual General Meeting.
  • Postpone the 10 November 2006 AGM to a later date to ensure that all documentation relevant to any resolutions pertaining to a capital raising within Jupiter Energy can be sent to shareholders in the required period prior to the holding of the AGM.

The Jupiter Energy Board is committed to an alternative approach to funding to ensure that the biodiesel project in Kuantan, Malaysia proceeds. The Directors believe that the project is extremely viable and will generate significant value for shareholders but to ensure the project remains on track, funding of some $40-50m will need to be secured before the end of 2006.

These funds are required to complete the building of the biodiesel facility. Any additional funding required, over and above the amount raised before the end of 2006, will be used to purchase the initial inventories required to commission the new plant and commence the commercial production of biodiesel. It is expected that these funds will be required in November or December 2007.

Shareholders should note that if any of the initial funds required are to be secured by way of a share placement, Jupiter Energy will first seek the requisite shareholder approval in general meeting in accordance with the ASX Listing Rules.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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