10:57am Tuesday 8th April 2008
By Deborah Johnson
BIODIESEL producer D1 Oils yesterday confirmed it is devising a potential cash-raising scheme with its major shareholders.
Shares in the company leapt by 9.87 per cent when it was revealed that the board is in "advanced discussions" to raise equity through existing shareholders buying further stakes at a discounted rate.
The announcement comes only days after reports circulated that D1 - which employs 40 people at its refinery in Middlesbrough - was allegedly looking to raise £30m in capital by sounding out investors.
In September, the firm, which develops energy crops into sustainable commercial fuels, posted a pre-tax loss of £10.3m when revealing its interim results.
Last night, the company's share price closed at 41.750p.
In a statement to the London Stock Exchange, D1 said it had noted the rising share price, adding: "The board of D1 confirms that it is in advanced discussions with its leading shareholders in relation to a potential equity fundraising at a discount to the current share price. Any such fundraising will be subject to shareholder approval."
Anthony Platts, divisional director in the Teesside office of investment manager Brewin Dolphin, esaid: "This is a rights issue, where existing shareholders may be asked to take more shares in the company in order to raise funds.
"Seemingly, this company is in the early stages of raising funds through securing more equity from existing shareholders."
The company has recently seen its founder and former chairman Karl Watkin resign as non-executive director of D1, who is said to have hinted he could make an offer for the group, although his interest is at a "very preliminary stage".
D1, which also has a refinery in Bromborough, Merseyside, also revealed it is looking to cut jobs as part of its review of downstream refining' and trading operations, having been hit by imports of heavily subsidised biodiesel from the US. A consultation period with employees is now under way.
The company also runs a 50-50 global venture with BP to develop biodiesel from the inedible oil of the jatropha curcas tree, and has targeted planting one million hectares by 2012.
The company has also been building a refining capacity in the UK in preparation for its first supplies of jatropha oil, which are due to be produced in the second half of this year, and has planned to use spare capacity to refine soy beans and other edible crops in order to diversify the business.
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