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Renova Energy

  • BY: Andrew Hore |
  • POSTED: 23/10/2008 |

Renova Energy has failed to raise more cash or reschedule its debts and its US business may be sold to a rival.

The ethanol company’s lenders have agreed a Plan of Reorganisation, which could mean that Renova’s business will be sold to AE Biofuels Inc. Unsurprisingly, Renova does not support this plan because it would receive nothing for the business and would not get back any of the $23m of unsecured loans made to the business.

Even if AE Biofuels does not raise the cash it needs to finance the purchase of Renova’s US business the lenders intend to take control.

Renova has an alternative plan to transfer the half finished Heyburn ethanol facility to the secured project creditors. It will take $20m to complete the plant and the ethanol market suffers volatile prices and increasing raw material costs. This still won’t give Renova Energy shareholders any return.

All these plans are subject to the approval of the US courts. Renova is still trying to raise cash in order to find an alternative that may provide its shareholders with some value.

The UK holding company intends to appoint an administrator before 31 October 2008.

The original US operations almost doubled their ethanol sales to 11.9m gallons and turnover increased 147% to $38m. EBITDA trebled to $6.9m. This shows that the company had a good business but it was overstretched by the costs of building a large ethanol production facility. 

Brewin Dolphin resigned as nominated adviser on 17 October.

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