Viridis completes private placement, prepares to startup plant
Vancouver, British Columbia-based pellet producer Viridis Energy Inc. has announced it closed the second, and final, tranche of its $5 million non-brokered private placement, which was announced on April 3. The second tranche consisted of 20 million units at a price of 10 cents per unit. A unit consists of one common share and a half of one non-transferrable share purchase warrant.
According to information released by Viridis in early April, the proceeds of the private placement will be used for capital expenditures and operating expenses associated with its Scotia Atlantic Biomass Co. Ltd. pellet plant, which the company acquired in 2012. The proceeds are also slated for use to repay an $800 working capital loan, as well as general working capital.
“This final portion of our $5 million financing enables us to complete the start-up of Scotia Atlantic Biomass, which we expect to have operational within the next six to eight weeks. This will bring our annual capacity to 180,000 metric tonnes,” said Christopher Robertson, chairman and chief executive officer of Viridis Energy Inc. in a statement. “As targets for green, renewable energy consumption set by major industrial countries become effective, we expect demand for wood pellets to far surpass supply. To prepare for the projected growth in demand, we are also studying production expansion alternatives at the company’s Kelowna, BC, plant.”
On April 15, Viridis announced the closing of the first tranche of $3 million. The first tranche consisted of 30 million units at 10 cents each. Each unit consisted of one common share of the company, and half of one non-transferable share purchase warrant.
The company also recently announced its financial results for 2012, reporting full-year 2012 revenues of $9.5 million, compared to $12.4 million reported for the prior year. According to Viridis it revised its arrangements last year, requiring customers to pay delivery costs directly to transport providers. As such, revenue from delivery costs is not included in the 2012 results, but accounts for $2.2 million of the 2011 revenue.
Gross profits for 2012 increased, reaching $1.1 million. The gross profit for 2011 was $1 million. Viridis notes that the increase in profit reflects a 14 percent increase in the average selling price of pellets.
“During the year, the company’s Okanagan Pellets brand continued to gain market share in the US heating market,” said Robertson. “Although the company does not segment its revenue by product line, we achieved a 22 percent operating margin on the pellet line. However, the volumes fell short of our forecast and as a result; we determined it was necessary to write-down the company’s goodwill and intangible assets for accounting purposes. While this has a significant non-cash impact on our financial results for 2012, it shortens the path to net profitability.”