Lignol acquires majority interest in Territory Biofuels Ltd.

By Lignol Energy Corp. | May 07, 2013

Lignol Energy Corp. announced it has provided a $510,000 loan to Territory Biofuels Ltd. in exchange for receiving 2.5 million stock options from TBF, making LEC the majority shareholder of TBF on a fully diluted basis with a 51.9 percent shareholding.

LEC has provided an interest-free, nonrecourse loan to TBF in the principal amount of $510,000, which is repayable on Jan. 15, 2014. In consideration for LEC providing the loan, TBF will issue common stock options to LEC exercisable up until June 15, 2015. The issuance of the TBF options is subject to certain undertakings by LEC, which are expected to be fulfilled on or before May 15, 2013.

Further to the company's April news, the convertible notes with a principle value of $1.2 million held by the company and issued by TBF were converted into common shares, which made LEC the largest shareholder in TBF with a 40 percent fully diluted equity stake at that time. With the issuance of the additional TBF options, LEC is expected to have a projected 51.9 percent stake on a fully diluted basis.

TBF owns a large-scale biodiesel facility located in Darwin, Northern Territory, Australia, which includes a Lurgi-designed biodiesel plant and the only glycerin refinery in Australia. The facility was commissioned in 2008 at a cost of $81.6 million, along with 38 million liters (10 million gallons) of related tankage, now leased by TBF. The biodiesel plant is the largest in Australia with a maximum rated capacity of 150 million liters per year (nearly 40 MMgy). Originally built to run on food-grade vegetable oil, the plant was shut down in 2009 due to feedstock constraints. TBF intends to restart the existing facility utilizing feedstocks such as tallow and used cooking oil and then plans to integrate new feedstock pretreatment technologies and catalysts to process a broader range of feedstocks such as lower-quality tallow and palm sludge oil; a waste product from palm oil mill extraction. TBF has established trading relationships with its shipping, offtake and feedstock partners, which it expects will allow it to profitably start up and operate the facility. Two LEC executive officers and directors, Ross MacLachlan and Stephen Morris, have been appointed directors of TBF with  MacLachlan also having assumed the role of chairman of TBF.

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