Velocys shares plummet as firm proposes fundraising

Waste-to-fuel company Velocys announced on Monday that it intended to raise around £18.4m before expenses by way of a firm placing and open offer to fund initial development costs for two key projects.

Velocys hoped to collect £14m by way of the firm placing of 139,605,000 new ordinary shares at a price of 10p each, and a further £4.4m from an open offer made to eligible shareholders for an additional 44,057,946 new ordinary shares.

The funds are intended to develop its Mississippi biorefinery, as well as progressing work on its waste-to-renewable jet fuel project in the UK.

The firm estimated that total remaining operating and project costs required to bring its Mississippi biorefinery project to final investment decision would be in the vicinity of £45m, with Velocys intending to secure investment from a strategic partner to cover the balance during the first half of the year.

David Pummell, chief executive officer of Velocys, said, "Today's financing ensures Velocys can take forward both the development of our second biorefinery in the US, targeting final investment decision around the middle of 2019 and completing the feasibility study for the third biorefinery in the UK."

The firm scheduled a general meeting for 31 January to discuss the placing.

As of 0920 GMT, shares had nosedived 62.62% to 10.19p.