The Perth-based company told the Australian Stock Exchange this morning that it was forced to re-negotiate the convertible note package with Amarath, after the lender announced “substantial trading losses.”

But Australian Ethanol said renegotiations have already started with another investment group.

‘The Amaranth LLC announcement of substantial losses has left the company with no option than to terminate the exclusive agreement for the convertible note package with Amaranth and advance discussion on a term sheet provided by another US based financial institution,” Australian Ethanol’s wholly-owned subsidiary US Canadian Biofuels Inc chief executive Carla Andres said.

“[Australian Ethanol] remains confident that the renegotiations will result in successfully completing the Beatrice Biodiesel Project financing package.”

In late August, Australian Ethanol announced its $US52.5 million ($A70m) facility, which will have annual capacity of 189.2 million litres, would be entirely funded via the convertible note facility and a $30 million senior debt facility.

Despite the setback with Amaranth, Andres said the senior lender has now confirmed its approval for senior debt and was currently preparing legal documentation.

Construction on the Beatrice biodiesel plant, which set to become the US’ largest biodiesel facility, started earlier this month.