VANCOUVER, Aug. 5, 2014 /CNW/ - Lignol Energy
Corporation (TSXV: LEC) ("LEC" or the "Company"), today provided a
corporate update in which management reported on its financial
condition and progress with commercial negotiations.
The Company is engaged in discussions with respect to several
commercial transactions that range from the sale or merger of each
of the Company's respective holdings, to that of a sale or merger
with LEC itself. As previously announced, the Company has
been working with its financial advisors and major shareholders to
establish the terms of a financing which it urgently needs to
complete. Over the past few months, the Company has received bridge
financing of $500,000 from Difference
Capital Financial ("DCF") in anticipation of a pending financing,
together with additional corporate and government financial
contributions which enabled the Company to operate. In the
meantime, the Company has recently received notices of default in
respect of interest payments on the outstanding secured debt with
DCF of approximately $13.1 million
and also from its landlord B.C.I.T. for past rent totaling
$198,000. There remains an urgent
need to conclude a financing and the Company continues to negotiate
with DCF the terms under which their secured note will be satisfied
and their participation in any financing will be considered along
with the participation of other prospective investors.
The Company has continued to take steps to reduce its monthly
cash burn including, reducing headcount, revising contractual
commitments and making certain reductions in executive
compensation. In addition, Neutral Fuels Parent Company which
manages the operations of Neutral Fuels (Melbourne) Pty Ltd. ("NF Melbourne") (which is
51% owned by LEC), recommended to place NF Melbourne into voluntary
administration which was recently undertaken. The business of NF
Melbourne had continued to be unprofitable and the prospects for
its turnaround in the near future were hampered by recent adverse
changes in market conditions.
The Company's primary focus has been to raise capital for the
restart of its biodiesel plant located in Darwin, Australia, which management believes is the
best course of action to realize value for shareholders. The
Company's paramount objective is to complete a financing over the
next month which will require an immediate bridge loan.
Discussions with LEC's financial advisors, major shareholders,
certain of its creditors and new investors have involved
negotiations relating to various structures that address pricing
and other terms as well as the treatment of the outstanding secured
debt with DCF of approximately $13.1
million and the conversion of approximately $400,000 in other debt. Although
discussions are continuing, as of today's date a financing has not
yet been confirmed.
Going concern
The Company currently has negative working capital of
approximately $17.1 million and
future government and corporate contributions receivable within the
next 4-5 months of $1.7 million. The
negative working capital includes the $13.1
million which has been drawn on the DCF credit facility and
which is currently due in December, 2014. The Company continues to
forecast that its working capital requirements for the next twelve
months will exceed the funds available from a combination of its
current working capital, existing government grants and corporate
relationships. The ability of the Company to continue as a going
concern is dependent upon its ability to continue to raise
additional capital to fund its business objectives, to be able to
repay amounts drawn under the DCF credit facility and to satisfy
the defaults registered by DCF and BCIT. In the current economic
climate there is significant doubt with respect to the validity of
these assumptions.
About Lignol Energy Corporation ("LEC")
LEC is an emerging producer of biofuels, biochemicals and
renewable materials. The Company is undergoing a transformation
from a leading technology developer in the biorefining sector, to
that of an owner of commercial biorefining assets. This strategy
has leveraged LEC's expertise gained through its experience with
the development of its proprietary biorefining technology.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Caution concerning forward-looking statements:
Certain statements contained in this document may constitute
forward-looking information within the meaning of applicable
securities laws. Such forward-looking statements or information
include, without limitation, statements or information about LEC's
ability to continue as a going concern, to immediately
obtain an injection of cash, and to continue to receive the
support of its creditors in order to continue to operate and meet
payroll and other basic commitments until a financing can be
concluded, to complete one or more commercial transactions that
range from the sale or merger of each of the Company's respective
holdings, to that of a sale or merger with LEC, to complete
discussions with DCF, investment advisors and major shareholders to
establish the terms of a financing which it urgently needs to
complete, LEC's ability to come to an arrangement with respect to
the treatment of the outstanding secured debt with DCF of
approximately $13.1 million and the
conversion of approximately $400,000
in other debt, (however there can be no assurances that such
finance will be forthcoming), LEC's ability to raise capital for
the restart of its biodiesel plant located in Darwin, Australia and its ability to attract partners
whom are willing to provide equity funding or other forms of
investment in the project, LEC's ability to monetize some or all of
its interests in each of Lignol Innovations Limited, Australian
Renewable Fuels Limited, and the Neutral Fuels businesses, LEC's
ability to complete its transition from a technology developer to
an owner and operator of commercial biorefining assets, LEC's
ability to restart the Darwin biodiesel plant and to subsequently
integrate the plant with M Energy's pretreatment facility and with
feedstock supply chains, LEC's ability to invest in, or otherwise
obtain, equity interests in energy related projects which have
potential synergies and the potential to generate near term cash
flow, LEC's ability to continue as a going concern and to raise
additional financing to fund the restart of the Darwin plant and to
fund the operations of LEC and its affiliates, and LEC's ability to
repay amounts owing to DCF under the secured revolving credit
facility, LIL's ability to satisfy certain project deliverables and
related funding conditions from existing and potential future
government grants so as to enable LIL to receive future grant
hold-backs, obtaining strategic partnership investments and
government funding for initial commercial projects. LEC and its
affiliates need an immediate injection of new funds in order to
continue to meet payroll and other obligations, and in the current
economic environment there is no certainty that this will be
accomplished. Often, but not always, forward-looking statements or
information can be identified by the use of words such as "plans",
"expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes" or variations of such words
and phrases or words and phrases that state or indicate that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved.
Such statements or information reflect LEC's current views
with respect to future events and are subject to certain risks,
uncertainties and assumptions including, without limitation, LEC's
ability to immediately raise additional capital to fund operations
and to support the capital requirements of its affiliates, the
requirements of the potential effect of changes in government
policy relating to the environment, and incentives for renewable
fuels, the potential impact of changes in the prices of feedstock
and the market price of liquid fuels including biodiesel, ethanol
and renewable chemicals, the ability of LEC and its affiliates to
generate future profits and to pay dividends, and to meet
increasing regulatory requirements, the effect of changes in
government policy relating to the environment, and incentives for
renewable fuels, the ability to meet relevant local and
international regulatory requirements.
Many factors could cause LEC's actual results, performance or
achievements to be materially different from any future results,
performance or achievements that may be expressed or implied by
such forward-looking statements or information, including among
other things, financial market conditions which will impact LEC's
ability to finance its operations and to meet future capital and
investment requirements, the demand for the market price of liquid
fuels including gasoline, biodiesel, ethanol, the market price and
demand for renewable chemicals, risks relating to the protection of
technology from infringement and those risk factors which are
discussed elsewhere in documents that LEC files from time to time
with securities and other regulatory authorities. Should one or
more of these risks or uncertainties materialize, or should
assumptions underlying the forward-looking statements or
information prove incorrect, actual results may vary materially
from those described herein as intended, planned, anticipated,
believed, estimated or expected. Except as required by law, LEC
expressly disclaims any intention or obligation to update or revise
any forward looking statements and information whether as a result
of new information, future events or otherwise. All written and
oral forward-looking statements and information attributable to us
or persons acting on our behalf are expressly qualified in their
entirety by the foregoing cautionary statements.
SOURCE Lignol Energy Corporation