20th May 2008 16:35
For Immediate Release 20 May 2008
Biofutures International plc
("Biofutures" or the "Company")
Notice of Extraordinary General Meeting ("EGM")
Biofutures today announces that it has sent a circular to its shareholders ("Shareholders") containing a notice of an EGM to be held at the offices of Stephenson Harwood, One St Paul's Churchyard, London EC4M 8SH at 11.00 a.m. on 6 June 2008.
At this EGM, the board of Biofutures ("Board" or "Directors") propose to seek Shareholder approval to two ordinary resolutions.
1. To approve the cancellation of the agreement made by the Directors in the document sent to
Shareholders seeking, inter alia, the approval for the acquisition of Zurex Corporation Sdn. Bhd
("Zurex"), dated 30 October 2006, to the effect that if sufficient bank facilities were not entered into,
and other forms of financing could not be found, the Company may decide not to proceed further with
the construction of the palm oil biodiesel plant ("Zurex Project") and instead seek, subject to obtaining
POIC's permission, to sell its rights to the development of the palm oil biodiesel plant to a third party
and to return its remaining cash resources to Shareholders or obtain Shareholder consent to make an
alternative investment ("Restrictive Agreement").
The Restrictive Agreement prevents the Directors from making other investments, in the event that the Directors decide not to proceed with the construction of the Zurex Project, without, inter alia, first seeking Shareholders' approval to re-invest Shareholders' funds as opposed to winding up the Company and returning any funds from the termination of the Zurex Project to Shareholders. Without this ability to make other investments (which includes the ability to invest in the Refinery Project, detailed below) the Directors are prevented from expanding the Company's business unless the Zurex Project is first terminated, which the Directors do not believe to be in the best interests of Shareholders at this time.
2. To approve the investing strategy, which is
"to continue to review the Zurex Project including potentially re-engineering the project into the Refinery Project which, through the addition of a plant module could be expanded into a palm oil biodiesel plant should the production of palm oil biodiesel become economically feasible and / or to invest in or acquire projects, assets, partnerships, joint ventures, businesses or companies (public or private) in Europe, Asia and the Middle East in the energy and utility sectors and their related infrastructures. Acquisitions and investments may be funded with cash, equity, debt or any mixture of the aforementioned ("Investing Strategy")"
and therefore the reclassification of Biofutures from a trading company to an Investing Company, as defined by the AIM Rules for Companies.
Zurex, a wholly owned subsidiary of Biofutures which acts as a holding company, was incorporated in Malaysia to establish a 200,000 tonnes per annum palm oil biodiesel plant at POIC Lahad Datu, Sabah, Malaysia. Zurex's strategy was to produce palm oil biodiesel from the feedstock of refined and crude palm oil in Malaysia and to sell the palm oil biodiesel produced.
Having completed the review of the Zurex Project the Directors believe that the Zurex Project, as currently defined, is no longer economically viable. However, having considered the global trend which shows an increased demand for palm oil and the resultant rise in prices, the Directors consider it a viable option (as part of the re-engineering exercise) to consider the refining of palm oil (through the Refinery Project) while retaining the flexibility to consider the production of palm oil biodiesel should economic circumstances permit in the future.
The refining of palm oil requires similar technologies to that which would have been utilised in the pre-treatment stage of the palm oil biodiesel plant under the Zurex Project, and thus the pre-treatment plant can be redesigned to become a palm oil refinery. If commissioned, the plant will initially be built as a palm oil refining plant and if a palm oil biodiesel plant becomes economically feasible, a trans-esterification module and associated ancillary equipment could be added to the Refinery Project to enable the production of palm oil biodiesel.
Once all necessary approvals are obtained and the Directors are satisfied on the feasibility of the Refinery Project they intend to utilise available funds to commission the Refinery Project and to maximize the use of existing assets that have been acquired and paid for by the Company without raising additional funds for capital expenditure. Working capital facilities will however be required to finance the Refinery Project in the initial period of its operations. The Directors believe that by using the 14 acres of land and the equipment that has been acquired to date, the value in the initial investment cost can be optimised and losses kept to the minimum.
For the six months ended 30 June 2007 losses attributable to the Zurex Project were £0.11 million and the total asset value relating to the Zurex Project was £20.73 million. For the same period the Group (Biofutures and Zurex) made losses of £0.45 million and had total assets of £29.41 million, of which £8.65 million was cash. As at 30 April 2008 available cash was £8.17 million.
In order to be in a position to increase Shareholder value the Board are seeking Shareholders' approval to consider the refining of palm oil while retaining the flexibility to produce biodioesel should economic circumstances permit. In addition, the Board would like Shareholders' approval to invest in other businesses and investments when opportunities arise in line with their proposed Investing Strategy.
Although the Directors believe that Biofutures could exist in its current form for the foreseeable future, by maximising interest income and minimising expenditure, without either making an investment or returning funds to Shareholders, the Directors would like to persue an active strategy of investment. The Directors intend that Biofutures makes at least one investment in the next twelve months, which could be an investment into the Refinery Project.
The members of the Board and its management team are made up of experienced individuals with diverse backgrounds covering legal, financial, engineering and energy related chemical industries with experience in corporate transactions over a variety of sectors. The Directors will be guided by their experiences in their respective fields of expertise and management skills in implementing the Investing Strategy. Investments and acquisitions will be subject to the relevant legal and financial due diligence being first made, and where necessary, the Company will appoint suitably qualified consultants and market researchers to advise the Directors on the feasibility and risks associated with any potential acquisition or investment.
The Investing Strategy, if approved, will guide the future direction of Biofutures which at present is unclear to Shareholders due to the uncertainty regarding the viability and direction of the Zurex Project. If Shareholders' approval is obtained in relation to the Investing Strategy, Biofutures will be reclassified from a trading company to an Investing Company, as defined by the AIM Rules for Companies, with Zurex being one of Biofutures' existing investments. This reclassification will be viewed as a fundamental change of business and as an Investing Company Biofutures will therefore have to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules for Companies or otherwise implement its Investing Strategy to the satisfaction of the London Stock Exchange within twelve months of having received the consent of Shareholders at the EGM. If this does not occur, trading in the Company's Ordinary Shares will be suspended.
For further information please contact:
Julie Pomeroy, Finance Director
Biofutures International Plc 0117 920 0092
Emily Morgan
Blomfield Corporate Finance 01275 871 717
Paul Vann
Winningtons Financial PR 0117 920 0092
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