Australian Renewable Fuels enters voluntary receivership

January 21, 2016 |

In Australia, the Board of Australian Renewable Fuels Limited has placed the Company into voluntary administration. The Board has been conscious of the rapidly declining oil price and been monitoring closely the Company’s feedstock pricing so as to ensure that appropriate trading margins were maintained. Historically there has been a relatively short time lag between a reduction in the oil price and a reduction in feedstock pricing. At this time, feedstock pricing has increased and the historical long term correlation between the barrel price of oil and the cost price of feedstock has broken down. This has been exacerbated by the extent of the dramatic fall in the oil price and hence our selling price for biodiesel. That contrary movement and break in the historical correlation has impacted negatively on gross margins.

In addition, the Board also notes that the continued and destabilizing uncertainty of the Federal Government’s policy in regard to biodiesel over recent years has caused significant financial distress to the Company and had increased the Company’s financial reliance upon its debt providers.

The Board and management have rigorously examined options to protect the business and provide a basis for a restart of operations if or when satisfactory gross margins return. These included seeking price increases from our customers, pursuing more profitable export sales opportunities to the USA along with idling the production facilities and reducing all corporate activities. Those initiatives would have required the support of the major lenders to allow the Company to retain funds and pay all outstanding trade creditors and employee entitlements.

To that end, a number of proposals were submitted to the Company’s debt providers. Unfortunately the debt providers have considered their position and have rejected these proposals leaving the Board with no alternative but to appoint a voluntary administrator.

Print Friendly, PDF & Email

Tags: ,

Category: Producer News

Thank you for visting the Digest.