Shares in Perth-based biodiesel producer Mission Biofuels Ltd jumped more than 12 per cent on news of a $50 million capital raising to fund its Indian and Malaysia expansion plans, proving there is energy yet in the listed biofuels sector.
Shares in Perth-based biodiesel producer Mission Biofuels Ltd jumped more than 12 per cent on news of a $50 million capital raising to fund its Indian and Malaysia expansion plans, proving there is energy yet in the listed biofuels sector.
Mission stock closed at $1.44 a share, well above the fund raising price of $1.30 each, which was below recent highs but well above levels seen earlier in the year and late last year.
Mission has raised the $50 million through a placement to funds a 250,000tpa expansion to its Malaysian biodiesel production facility and development of its Jatropha Curcas feedstock business in India.
The company will place 38,461,538 unlisted and unsecured convertible notes with a face value of $1.30 each to raise the money, in a deal arranged by BBY Ltd.
Mission has reserved the option to increase the capital raise to $65 million, reserving $40 million for spending on the Malaysian plant.
The placement, which closed oversubscribed, was corner-stoned by several existing institutional shareholders and new shareholders, including Credit Suisse and QVT Fund LP.
The balance of the offering was subscribed for by several leading London and New York based institutional investors.
The full text of a company announcement is pasted below
Mission Biofuels Limited ("Mission" or "the Company") is pleased to announce a Placement to sophisticated and professional investors of 38,461,538 unlisted and unsecured Convertible Notes with a face value of A$1.30 per Convertible Note (representing a 21% premium to the 90 day VWAP) to raise A$50,000,000. The capital raising will finance a 250k tpa expansion biodiesel production facility and provide capital to expand Mission's Jatropha Curcas feedstock business.
BBY Limited acted as financial advisor to Mission and as sole arranger for the facility. The placement has been oversubscribed and was corner-stoned by several existing institutional shareholders and new shareholders, Credit Suisse and QVT Fund LP. The balance of the offering was subscribed for by several leading London and New York based institutional investors. Mission reserves the option to increase the capital raise to A$65 million.
Managing Director of Mission Biofuels Nathan Mahalingam said, "Mission is focussed on becoming a significant and integrated player in the industry by using its inherent competitive advantages and moving quickly upstream into sustainable feedstock production to stay ahead of competition. We believe that the expansion and feedstock initiatives will add substantial shareholder value as the initiatives are highly earnings accretive".
The Expansion Plant
- Capital raising provides fully funded finance for the new 250,000 tpa facility
- 2.5x the capacity at 1.75x the CAPEX cost of Mission's first 100,000 tpa plant
The expansion plant will be built adjacent to the first facility at an estimated cost of A$50 million with an expected commissioning date of end March 2008 for the trans-esterification facility and end July 2008 for the pre-treatment and Glycerine purification plant. This staged construction allows Mission to lower the external financing required for the CAPEX to only A$40 million and commence earning revenues from the expansion plant in April 2008. The balance of the capital raised will be applied to the feedstock business.
The expansion facility is expected to add an additional 50,000 tonnes of biodiesel sales in Financial Year 2008. With this, total production and sales in financial year 2008 are expected to be 110,000 tonnes - almost double the production estimates in the prospectus. The prospectus forecast NPAT for Financial Year 2008 of A$27.6 million
Upstream Feedstock Business
- Capital raising to fast-track the expansion to 100,000 acres by end of 2007
- Anticipated 30% of first 100,000 tpa production facility to be fed by Jatropha Curcas oil in FY08
Mission intends to be self sufficient in high quality cheap feedstock for the 350,000 tonnes per annum capacity by 2011, through its already commenced Jatropha Curcas procurement activities, through contract and other commercial arrangements in India.
Mission, through its 70% held Indian subsidiary, Mission Biofuels India Private Limited has recently, through an acquisition, gained access to 22,000 acres of planted Jatropha Curcas, which produces an inedible oil suitable for use in biodiesel production. Mission plans to increase the planted acreage to 100,000 acres by the end of 2007 and gradually to 250,000 acres by 2010.
Mission has entered into partnership agreements with The Energy and Resources Institute (TERI) and Tamil Nadu Agricultural University (TNAU) to provide technical assistance and spearhead R&D initiatives on Jatropha Curcas plantation technology, improvement of product and by-product yields, farm extension and agronomics.
