Velocys raising £6m to fund ongoing development

Renewable fuels company Velocys announced on Monday that it intends to raise £6m gross by way of a placing.

The AIM-traded firm said the placing of 60,000,000 new ordinary shares would be at a placing price of 10p each, representing a discount to the closing mid-market price as at 20 July of 0.52p per share.

It said the placing shares would represent around 15.4% of its enlarged share capital.

The net proceeds of the placing would be used predominantly to strengthen the company's balance sheet, fund its portion of the pre-FEED development costs for its UK waste-to-renewable jet fuel project, allow it to continue to support the ENVIA project to the point where it said it understood the financial plan to restore the second reactor to operation, amd to support the process for onboarding one or more strategic investors to provide development funding for the Mississippi biorefinery project.

Velocys said the placing of the first tranche, being 30,000,000 shares, was not conditional upon the passing of any resolutions by shareholders, and would be issued for cash on a non-pre-emptive basis pursuant to the authorities granted to the company by its shareholders at the 2018 annual general meeting in June.

The placing of the second tranche, being another 30,000,000 shares, wass conditional on the passing of “certain resolutions” and upon first admission occurring on or before 30 July, the board explained.

It said a general meeting was being convened for the purpose of considering those resolutions on 8 August in London.

“Today's financing enhances our runway and will be used to drive forward our US and UK projects to meet their next major milestones over the coming months and to support ENVIA,” said Velocys chief executive David Pummell.

“We thank all our shareholders for their continued backing of our strategy and its implementation.”

Pummell said he particularly looked forward to keeping shareholders informed of the firm’s progress as it prepare to onboard one or more strategic investors into its Mississippi project during coming months.

“We continue to make significant progress with our projects and l look forward to periodically hosting webcasts to discuss our strategy and progress as we drive our Company forward into an incredibly exciting future."