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Press release from CNW Group

Lignol Energy Corporation receives increased credit facility of up to $12.5 Million from Difference Capital Financial Inc.

Wednesday, August 14, 2013

Lignol Energy Corporation receives increased credit facility of up to $12.5 Million from Difference Capital Financial Inc.

20:37 EDT Wednesday, August 14, 2013

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, Aug. 14, 2013 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("LEC" or the "Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, is pleased to announce that further to its announcement of February 27, 2013, the Company has replaced its secured credit facility of $5 million, which was amended on July 9, 2013 for up to $6.25 million (the "Amended Loan"), with a new secured revolving credit facility (the "Note") of up to $12.5 million with Difference Capital Financial Inc. ("DCF"), who prior to this transaction own 33.9% of LEC on a partially diluted basis, assuming the exercise of only DCF's warrants.

"This support from one of our major shareholders provides us timely access to the funds needed to capitalize on commercial opportunities in our sector.  Today's announcement is another step forward in executing our strategy to transform our company in to a global biorefining and biochemicals company", said Ross MacLachlan, CEO and Chairman of LEC.

Under the terms of the Note, 50% of the unpaid principal amount and accrued and unpaid interest on such amount will be payable on the closing of an equity financing of at least $20 million (as long as none of the outstanding Warrants (as defined below) remain unexercised) and the remaining unpaid principal amount and accrued and unpaid interest on such amount be payable on December 31, 2014.  Amounts drawn under this facility will bear interest at 9% per annum and any amount owing under the Amended Loan (the "Drawn Amount") is deemed to be a borrowing under the Note.  The Company shall pay to DCF a commitment fee of $200,000, of which $100,000 has already been paid in respect of the earlier credit facilities. The Note provides DCF with a security interest in all of the shares owned by LEC of each of Australian Renewable Fuels Limited ("ARW") and of Territory Biofuels Limited ("TBF").

In connection with providing the Note, DCF is entitled to receive 3,555 warrants to purchase common shares in the capital of LEC (each a "Warrant Share") for each $1,000 drawn down, which allows for up to approximately 44.4 million warrants (the "Warrants") to be issued and if fully exercised, would result in DCF owning 48.3 percent of LEC on a partially diluted basis, assuming the exercise of only DCF's warrants. DCF has received 21,418,875 Warrants in respect of the Drawn Amount.  Each Warrant is non-transferrable, shall expire on December 31, 2014 and entitle the holder to purchase one Warrant Share at an exercise price of $0.15 per share, subject to any adjustments necessary to comply with applicable securities laws and requirements of the TSX Venture Exchange or any other stock exchange in which the Lender's securities are listed.

The Company has made a draw down request for which it received $2.5 million from DCF and in accordance with the Note has issued to DCF 8,887,500 Warrants. These funds have been requested by LEC in order to meet current and short term financial obligations. If DCF were to exercise the Warrants issued in respect of this withdrawal, the Drawn Amount and all other warrants currently owned by DCF, then DCF would potentially own 44.4 percent of LEC.

About Difference Capital Financial Inc. ("DCF")

Difference Capital Financial Inc. (TSXV: DCF) is a publicly-listed, Toronto-based specialty finance company focused on creating shareholder value through strategic investments in, and advisory services for, growth companies, particularly in the technology, media and healthcare sectors, as well as through opportunistic investments in undervalued financial assets and real property.

About Lignol Energy Corporation ("LEC")

LEC (TSXV: LEC) is an emerging producer of biofuels, biochemicals and renewable materials from waste biomass. LEC owns 100% of the issued and voting shares of Lignol Innovations Ltd. ("LIL"); a Canadian biorefining company with an integrated pilot plant demonstrating its technology for the production of cellulosic ethanol, high value cellulose and high performance lignin. LEC owns a 55% controlling interest in Territory Biofuels Limited; the largest single biodiesel plant in Australia (140 million litres per annum), which includes the largest glycerine refinery in the country.  LEC also owns 21% of Australian Renewable Fuels (ASX: ARW); currently the largest biodiesel producer in Australia with three plants having a combined 150 million litres per annum capacity. LEC also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with the Company and have the potential to generate near term cash flow.

Caution concerning forward-looking statements:

Certain statements contained in this document may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about the entering into the Note, the repayment of the Note, the issuance of the Warrants, the ability to draw down additional funds in the future, TBF's ability to finance, restart and profitably operate its 140 million litre per year biodiesel plant and glycerine refinery, TBF's ability to successfully operate the Darwin facility and to generate revenues and cash flow, TBF's ability to obtain US EPA approval, TBF's ability to work with strong commercial partnerships and to become a major regional player in the biodiesel market in the Pacific Rim, TBF's ability to integrate new pretreatment technologies and catalysts to facilitate the processing of a broad range of lower cost feedstocks, the successful outcome of projects undertaken under the Technology Collaboration Agreement between LEC and TBF, LEC's ability to continue as a going concern and to raise additional financing to fund the operations of LEC and LIL and to support the financing requirements of TBF, DCF's ability to provide additional  funding in the future under the increased line of credit, DCF's ability to exercise its Warrants, LEC's ability to invest in, or otherwise obtain, equity interests in energy related projects which have technical and commercial synergies with the Company and which have the potential to generate future dividends and near term cash flow, the development status of LIL's fully integrated pilot scale biorefinery in Burnaby, British Columbia, the planning and development of a commercial plant, LIL's ability to complete project deliverables which are funded in part by government agencies, obtaining strategic partnership investments and government funding for initial commercial projects. Often, but not always, forward looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Such statements or information reflect LEC's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, our ability to establish the validity of LIL's technology at the fully integrated biorefinery pilot plant scale, LIL's ability to satisfy the conditions of existing government grants and to obtain new additional grants, our ability to continue to finance our operations, to meet current obligations, and to finance and complete the development of a commercial project, LIL's ability to work with Novozymes to produce cellulosic ethanol at production costs competitive with gasoline and corn ethanol, LIL's ability to develop products and to obtain off-take agreements, LIL's ability to obtain requisite regulatory approvals and its ability to enter into agreements with strategic partners on terms acceptable to us, LEC's ability to influence the strategy, operations and financial performance of TBF or of ARW respectively, the reliance on publically available information of ARW in the Company's evaluation of its acquisition of shares in ARW, the potential inability to divest the ARW ordinary shares due to modest trading volumes and the inability to divest the TBF ordinary shares, the cost of any future ARW capital investment, the fluctuation of biodiesel and feedstock prices on ARW and TBF, the effect on ARW and TBF of changes in government policy relating to the environment, and incentives for renewable fuels, the ability of ARW and TBF to generate cash flow and pay dividends, and the ability of ARW and TBF to market their products overseas and to meet relevant regulatory requirements. Many factors could cause LEC's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, the technological challenges that remain to be surpassed in obtaining the necessary operating data from LIL's fully integrated biorefinery pilot plant that is required prior to completing the next scale-up of the technology, financial market conditions which will impact our ability to finance our operations and to finance the construction and operation of a commercial plant, the price of gasoline and demand for ethanol, the market pricing and demand for renewable chemicals, risks relating to the protection of LIL's core technology from infringement and those risk factors which are discussed elsewhere in documents that LEC files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended planned, anticipated, believed, estimated or expected. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

 

SOURCE: Lignol Energy Corporation

For further information:

Lignol Energy Corporation 
David Turner
Chief Financial Officer
Tel: 604-453-1241
Email: dturner@lignol.ca

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