The company behind plans for a dedicated green jet fuel plant on the South Humber Bank has hit a significant funding hurdle.
Velocys Plc appears to have lost a £12 million investment Stateside, having not met various conditions attached to the pledge. The announcement sent the company’s share price to a new low, as it revealed funding will still be required in the current year to meet its objectives – with significant public funds also attached to its ambitious plans.
Carbon Direct Capital had been flagged in May as a major element in a £32 million fundraiser. The New York-based investment firm was focused on climate impact initiatives, and a $15 million commitment via convertible loan notes had been made. It would allow it to turn the investment into equity in the company when trading.
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However, it relied on the £32 million, or $40 million as it equalled then, being raised alongside. That has not happened, despite an extension to the deadline set when the deal was brokered.
In a statement to the City, the company said: “Velocys continues to be in active funding discussions with all strategic investors who have been undertaking due diligence for some months with a view to obtaining long term funding for the company. It has become clear that any investment into the company resulting from these discussions is unlikely to be on the same terms as the previously announced CLN, accordingly there will be no further extension to the CLN longstop date. There are no binding arrangements for funding at this stage.
“Velocys still anticipates that funding will be required before the end of this calendar year and therefore the board is prudently exploring near term funding options as discussions with the strategic investors continue. Further updates will be provided in due course.”
Its Altalto Immingham plan for Stallingborough, backed by British Airways, was consented in May 2020. The £350 million to £500 million investment, with around 80 jobs attached to it, focuses on Hobson Way, and the conversion of black bag domestic rubbish into green jet fuel, using proprietary technology developed by the Oxford spin-out that merged with a US tech firm. A construction agreement was been signed with engineering giant Bechtel at the turn of the year, and with positivity around the ‘Jet Zero’ proposals on both sides of the Atlantic, it appeared firmly on the front foot.
Shares fell from 0.5p to 0.33p in the morning’s trade, down 67 per cent. It has gradually fallen from 2.52p when the deal was structured, having opened the year at 4.6p.
Since plans were launched in December 2018, Phillips 66 – a short hop across Port of Immingham from the proposed site – has started producing for BA, with scaling up of production seen as vital to hit Net Zero targets.
Original artice – https://business-live.co.uk/all-about/yorkshire-humber
