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Aug. 30, 2013 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("LEC" or "the Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, today announced its financial results for the year ended
April 30, 2013 (all figures in Canadian dollars, unless otherwise noted).
"In Fiscal 2013 we successfully attracted two new investors who now each own more than 25 percent of the Company, and with their support, have acquired a majority and controlling stake in the largest biodiesel plant in
Australia (owned by TBF with an annual capacity of 140 million litres) and also own an investment of 21 percent in ARW which is currently the largest producer of biodiesel in
Australia with an annual capacity of 150 million litres", said
Ross MacLachlan, President and Chief Executive Officer. "Subject to raising additional finance, this has positioned LEC to potentially report future consolidated revenues and the potential to generate cash flows to support the ongoing commercialization of LIL's technology."
Fiscal 2013 Highlights:
Closed a series of equity financings raising a total of $6.97 million and issued a $2.245 million debenture which was converted into equity within the year;
Established a secured credit facility for up to $5 million with Difference Capital Funding Inc. ("DCF");
Made a series of strategic investments/acquisitions:
Acquired a 21 percent interest in Australian Renewable Fuels ("ARW")
Acquired a 40 percent interest in Territory Biofuels Limited ("TBF")
Lignol Innovations Limited ("LIL"):
Completed the successful optimization of ethanol production with Novozymes
Expanded its number of issued patents to 15
Made further advances in HP-L TM lignin application development
Secured its first commercial supply agreement for HP-L™ lignin in the thermoplastics sector
Subsequent Event Highlights:
Replaced the DCF line of credit with a secured revolving credit facility of up to $12.5 million
Agreed to provide TBF with further equity funding of up to A$1 million potentially increasing LEC's investment to up to approximately 66% of the issued and outstanding shares of TBF
May 27, 2013, the Company announced that it had agreed to acquire an additional 2.67 million shares of TBF for
A$1.0 million as part of a financing which also provides for the further issuance of approximately 0.25 million shares of TBF to other shareholders of TBF. Upon completion, LEC became the majority shareholder of TBF with approximately 54% of the issued shares of TBF and approximately 60% on a fully diluted basis.
August 14, 2013, the Company announced that it had replaced its secured credit facility of
$5 million with DCF, which was amended on
July 9, 2013 for up to
$6.25 million (the "Amended Loan" or the "Drawn Amount"), with a new secured revolving credit facility (the "Note") of up to
$12.5 million with DCF. Under the terms of the Note, 50% of the unpaid principal amount and accrued and unpaid interest on such amount will be payable on the closing of an equity financing of at least
$20 million (as long as none of the outstanding Warrants, as defined below, remain unexercised) and the remaining unpaid principal amount and accrued and unpaid interest on such an amount are payable on
December 31, 2014. Amounts drawn under this facility will bear interest at 9% per annum and any amount owing under the Amended Loan (the "Drawn Amount") is deemed to be a borrowing under the Note. The Company agreed to pay DCF a commitment fee of
$0.2 million, of which
$0.1 million had already been paid in respect of the earlier credit facilities. In consideration for providing the Note, DCF is entitled to receive 3,555 warrants to purchase common shares in the capital of LEC (each a "Warrant Share") for each
$1,000 drawn down under the Note, which allows for the issue of up to approximately 44.4 million warrants (the "Warrants") which if fully exercised would provide LEC with
$6.66 million and would result in DCF owning 48.3 percent of LEC on a partially diluted basis, assuming the exercise of only DCF's warrants. DCF has received 21,418,875 Warrants in respect of the Drawn Amount. Each Warrant is non-transferrable, shall expire on
December 31, 2014 and entitle the holder to purchase one Warrant Share at an exercise price of
$0.15 per share (the "Exercise Price"), subject to any adjustments necessary to comply with applicable securities laws and requirements of the TSX Venture Exchange or any other stock exchange in which the Lender's securities are listed.
August 19, 2013, the Company announced it had agreed to provide TBF with equity funding of up to
A$1 million over the course of the next several months. The first tranche of
A$0.5 million is payable in two instalments: the first instalment of
A$0.2 million has been made and the second instalment of
A$0.3 million is due on or before
September 15, 2013. The opportunity to subscribe for the remaining
A$0.5 million worth of shares of TBF will be offered to existing shareholders of TBF (other than LEC) who may subscribe on the basis of their proportionate entitlement and LEC has agreed to fund any amounts not subscribed by those existing shareholders and to close this round of financing no later than
October 31, 2013. The closing of this entire transaction is subject to regulatory approval.
The consolidated financial statements of the Company for the year ended
April 30, 2013 include the accounts of LEC, its wholly owned subsidiary LIL and its controlling interest in TBF. The Company acquired a 40 percent interest in TBF effective
April 15, 2013, and determined, from a regulatory and reporting perspective, that it had achieved control over TBF on that date and as a result, has consolidated the results of TBF's operations and its balance sheet from the date of
April 30, 2013. The impact of consolidating TBF resulted in the inclusion of assets totaling
$19.1 million (including
$18 million in biorefinery plant and storage tank assets), and total liabilities of
$21.0 million, which included
$15.4 in long term liability, representing a long term lease for the storage tanks. Had TBF been consolidated from
May 1, 2012, the impact would have been to increase LEC's consolidated loss by approximately
$0.7 million (amount unaudited).
The activities of LEC during the year were largely directed to increasing its investment in ARW from 11 percent to 21 percent, and to providing funding for the acquisition of a controlling interest in TBF, as well as continuing to investigate other investments in similar energy-related projects. During the year, LEC's wholly-owned subsidiary LIL actively pursued commercial and technical partnerships to advance the commercialization of its technology.