Debts forcebiofuels company to de-list

Aug 3 2007 by James Barton, The Journal

THE region said goodbye to another plc yesterday after Biofuels Corporation delivered on its promise to de-list from the stock market.

The Billingham company swapped 94% of the equity in the company’s main subsidiary – Biofuels Corporation Trading – with Barclays in exchange for the cancellation of debts which had risen to £106m.

The company told The Journal in June it was to seek shareholder approval to de-list the business after debts to its bankers became too huge to manage and insolvency loomed.

The company, the UK’s biggest biodiesel producer, is now a private company and its shares have ceased to be traded on London’s Alternative Investment Market (AIM).

This is the culmination of a two-year period at Biofuels, which has seen it suffer numerous twists and turns after it attempted to hedge the company’s trading risks in a £50m one-off loss.

Cost over-runs at its Seal Sands plant and a downturn in the biofuels market contributed to losses of £74.4m last year and £32m for the year ending March 2007.

Wise Speke divisional director Vinay Bedi said: “Unfortunately it has not worked out at this stage for Biofuels but there is every possibility that Barclays will continue to keep it ticking over as a private company and, you never know, one day it may come back to the Stock Exchange.”

The government’s implementation of the Renewable Fuel Transport Obligation (RFTO) – which obliges distributors to source 2.5% of their needs from biofuels or face a 15p-a-litre duty – has not resulted in an improvement in the company’s margins as had been hoped.