Viridas hits trouble over Brazil venture

The Leeds-based company, which in recent years has transformed from an underwear and parasol maker to a biofuel business, yesterday said it was considering yet another change of direction if it could not

progress with plans to grow jatropha.

It still hopes to develop a commercial biofuel operation producing oil and biomass from the jatropha plant, an inedible but highly-calorific plant which grows in Brazil.

Viridas said lack of clarity on Government support for biomass firing means investors were unwilling to inject 1.4m to develop the business.

Yesterday it revealed losses for the first six months of the year – 294,000 before tax – but has yet to achieve revenues. At the end of June it had 290,000 of cash and equivalents remaining.

Shares dropped 6.1 per cent to 7.5p.

"If we do not put in place funding within the next six months then it's likely that we would come to the conclusion that we cannot make the thing happen," said executive chairman Stanley Wootliff.

"But it's not black and white – we're talking to a whole range of people on all sorts of permutations.

"We are very committed (but) confidence ebbs and flows. But we're not throwing the hat in as at today."

He said Viridas was attracting considerable interest from entrepreneurs who would like to use it as a cash shell. However, he declined to elaborate on what direction it could take.

Viridas still hopes to raise around 5m to fund a 250-hectare (1 sq mile) base jatropha plantation in Brazil, from which seeds would be derived for a much larger plantation. It said while talks to secure 1.4m of this funding continued with "a number of highly-credible potential investors", "it is proving challenging to bring such discussions to a close".

Mr Wootliff, who has about 20 per cent of the Viridas shares, said investors were holding back while uncertainty prevailed over what support biomass burning would receive in future.

Viridas added it had cut directors' remuneration to save cash.

Viridas has a 10-year supply and development agreement in place with chemical giant Ineos Enterprises.

The deal, for up to 60,000 tonnes of oil annually, would be triggered if Viridas hit commercial production levels.

It also has a development and partnership deal with an unnamed leading UK power generator which could see it supply 240,000 tonnes of biomass annually.

Clarity urged over support

Viridas, along with others hoping to profit from biomass, has called for clarity on Government support for the fuel.

Biomass is organic, plant-based material. It can be derived from agricultural residue such as oak husks, straw and cocoa shells. Forestry also produces residue such as bark and branches, while materials destined for landfill also contain waste wood.

Green UK energy projects are supported by the Renewables Obligation Certificate (ROC) scheme.

It awards ROCs of varying bands to power projects such as wind and biomass burning.

ROCs are traded to provide a source of income.