The company behind plans for a green jet fuel refinery on the South Humber Bank could be bought out as it risks running out of cash.
Velocys, which is struggling to raise vital funds to progress its work, has been approached by a consortium that includes a previous interested backer, with a £4.1 million bid potentially in the offing. It comes as it told how it will be unable to operate into the new year without a further funding injection.
Investment houses Carbon Direct Capital Management and Lightrock, as leaders of a consortium, have approached the embattled Oxford University spin-out – behind the licensed conversion technology – as part of ongoing funding discussions. Velocys has been working with British Airways on a consented £350 million reference project at Stallingborough, near Grimsby, as well as another Stateside.
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Velocys informed the City that it has received a “non-binding indicative all-cash offer” for the entire issued share capital of the business from the US and UK impact equity specialists.
While described as being at “a substantial discount to the company’s share price” at the start of the week, it includes the “intention for the consortium to provide significant funding for the company to meet its long-term growth capital needs”. Discussions on near-term funding are also underway.
In the statement, the company – led by chief executive Henrik Wareborn – said there was no certainty an offer would be made, but was working towards recommending the proposal.
“The evaluation of the proposal by the board and its advisers is ongoing and the board recognises that it should assess the proposal as a whole in light of the company’s very near-term funding requirements and significant long-term funding needs,” it said. “The board also notes the challenging equity capital market environment, particularly for small public companies with limited revenue, and that it has been unable to secure the additional funding it has been seeking since completion of its last placing of new ordinary shares in June 2023.
“Furthermore, the board notes that, in the event that it were to be able to secure funding prior to the end of December 2023 to satisfy its funding requirements, existing shareholders would suffer significant dilution in the unlikely event that the company was able to raise sufficient funds through the issue of new ordinary shares. Accordingly, the board is continuing engagement and discussions with the consortium and its advisers with a view to progressing and recommending the proposal.”
Close of business on December 18 has been set as a deadline for the announcement of any firm intention to make and offer.
Carbon Direct had looked to make a $15 million investment, announced in May, but funding milestones were missed, leading to it pulling out last month.
Original artice – https://business-live.co.uk/all-about/yorkshire-humber
