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March 23, 2011

Troubled UK biofuel company blames unclear government policy

by Rachel Constantine

The British biofuel company, Viridas, has admitted that it could be facing administration, blaming hesitant investment due to the government's "lack of clarity" over its support for biomass as a renewable fuel.

In an official statement from the Leeds-based business, a spokesman said that the company had very limited funds remaining and that the directors were currently considering a number of options. These included placing the company into administration or some other insolvency process.

The company had been seeking £1.4 million for the next stage of its development plan, which would have involved the establishing of a farm in Brazil to grow jatropha trees for biomass fuel.

The spokesman said, "Unfortunately, lack of clarity from the government regarding future support for biomass in the renewable energy industry and the reduction of greenhouse gas emissions in the UK has created a high degree of uncertainty and had a significant negative impact on the decision making process of potential investors."

The company said a potential option agreement with investors from Africa had now elapsed and it had informed the Stock Exchange of the directors' current actions. The spokesman said the company currently had the funds to settle its creditors, except for liabilities from the director contracts.


Business Sale
  
Viridas considers options as project funds dry up

Viridas plc warned it may have to go into administration following failure to secure £1.4m from investors as the next stage of its financing programme.

The company, which aimed to produce jatropha for the biofuels market, needed the funds for the next stage of its development plan to establish and plant out a base farm in Brazil.

It said, 'Unfortunately, lack of clarity from the government regarding future support for biomass in the renewable energy industry and the reduction of greenhouse gas emissions in the UK has created a high degree of uncertainty and had a significant negative impact on the decision-making process of potential investors.'

The board no longer believed it would be possible to raise the funds necessary to progress its project within an acceptable timeframe.

It had said in September that without tangible investor commitment by the end of the year, the feasibility of the project would have to be reviewed.

In January, the company announced it had entered an option agreement with certain African investors which provided, inter alia, for a number of payments to be made by the option holder.

However the third payment, due by close of business on Monday (March 14), had not been made and the option had therefore lapsed.

Viridas said that in view of this and the very small amount of funds remaining, its directors were reviewing the options available, which might include placing the company into administration or some other insolvency process.

It currently had the funds to settle all creditors in full with the exception of liabilities from the director contracts.

Under AIM Rules, it would be classified as an investing company and if not wound up would have to seek shareholder approval for a new investing policy.

Stock Market Wire

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