Scotia Atlantic Biomass receives fiber inventory loan

By Viridis Energy Inc. | March 19, 2015

Viridis Energy Inc. recently announced that its wholly owned subsidiary, Scotia Atlantic Biomass Co. Ltd., has received a working capital loan of $2 million from Cornwall Investments LLC, which will be used to procure Nova Scotia wood fiber for the production of its industrial pellets. The loan is secured by inventory in the form of a demand note with interest calculated daily and compounded monthly at the rate of 10 percent.

“Cornwall recognizes the importance of building a strong raw material inventory at Scotia Atlantic, particularly after spring break up when fiber is plentiful and cost efficient,” said Christopher Robertson, CEO of Viridis Energy.  “Scotia Atlantic has been purchasing fiber as needed from cash flow, which limited its ability to inventory lower priced material as seasonal supply and demand influences impacted prices.  This funding will allow us to accumulate up to a 90-day supply of low cost fiber inventory when it becomes available, which should decrease Scotia Atlantic’s average cost of goods sold and improve its gross margin.”

In addition to the Fiber Inventory Loan, Cornwall also holds a $3.1 million mortgage (including accrued interest) at 9 percent with Scotia Atlantic and a general security agreement and first charge on all property, plant and equipment.  In the fourth quarter of 2014, Cornwall also provided the company a $2.5 million line of credit for working capital purposes.

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