Lignol Increases Stake in Australian Renewable Fuels Ltd.
Date Posted: February 14, 2013
Vancouver—Lignol Energy Corporation (TSXV: LEC) ("LEC" or "the Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, announced Feb. 12 its participation in a Private Placement and Rights Offering financing undertaken by Australian Renewable Fuels Limited (ASX: ARW) which will result in LEC becoming one of the largest shareholders in ARW.
On February 7, 2103, ARW announced that its proposed takeover bid for all of the outstanding shares of Wentworth Holdings Limited (ASX: WWM) ("Wentworth") is expected lapse on February 15, 2013.
ARW announced it had instead proposed an alternative capital raising mechanism to raise A$12.3 million at A$0.007 per share, comprising an immediate private placement of A$4.27 million (the "ARW Placement") and an underwritten rights offering of A$8 million to ARW shareholders at A$0.007 per share with the ability of shareholders to apply for oversubscriptions (the "ARW Entitlement Offer").
The ARW Placement of A$4.27 million successfully closed on February 12, 2013 and the ARW Entitlement Offer is expected to close on March 5, 2013.
Through these transactions, LEC intends to make a further investment in ARW of approximately A$2.67 million and acquire a further 381,660,715 million ordinary shares in ARW as follows:
(i) 178,571,429 ordinary shares were acquired through the ARW Placement; and
(ii) 203,089,286 ordinary shares are expected to be acquired through LEC's participation rights in the ARW Entitlement Offer.
Upon completion of these two transactions, LEC expects to hold a total of 744,660,715 ordinary shares of ARW, or approximately 17.75% percent of ARW.
Furthermore, in connection with the ARW Entitlement Offer, Wentworth and Thorney Holding Pty Ltd. ("Thorney") have agreed to underwrite any shortfall under the ARW Entitlement Offer.
Subject to the completion of definitive documentation, LEC has committed to participate in the underwriting obligation with Wentworth and Thorney up to a maximum of A$1.75 million.
Should the ARW Entitlement Offer not be fully subscribed, then LEC will have an obligation to acquire further shares of ARW.
The above transactions will be funded by the Company's existing cash and by a proposed line of credit of C$5 million to be provided by one of LEC's major shareholders, Difference Capital Funding Inc. ("DCF"). It is currently proposed that DCF will provide LEC with a line of credit bearing interest at 8% per annum on the drawn amount.
The term of the credit facility will be the earlier of one year or until completion of a further equity financing.
Funds drawn on this facility will be secured on a sole recourse basis against all of the ARW ordinary shares owned by LEC.
For more information, call 604-453-1241.