Arfuels, a biodiesel group with production facilities in Largs Bay, South Australia and Picton in Western Australia, today announced a capital raising of $14.8 million, by way of a placement and subsequent rights issue.

The funds will be used for infrastructure development associated with the company’s two production facilities, for general working capital and to retire debt.

Arfuels also today announced it had achieved the production and sales targets necessary for it to qualify for the remaining $5.4 million of a Federal Government biofuels capital grant.

Amadeus said this is a key achievement for the group and it would take up its full entitlement in the rights issue. Participation will be by conversion of existing debt to equity.

Amadeus was the founding investor in Arfuels and holds 27.6% of ordinary shares as well as debt, which will now be converted.

Managing director Geoffrey Towner, who is also non-executive director of Arfuels, said the funds raised by Arfuels would enable the company to continue to expand their production capacity, in order to supply the “burgeoning” biodiesel market.

“We see a great future for the biodiesel market, and Arfuels in particular, which is why we have chosen to participate in the rights issue, and importantly convert debt into equity,” he said.

“We are particularly pleased that Arfuels has today achieved the targets necessary to qualify for remainder of the capital grant. This is a significant stage in the continuing increase of biodiesel production capacity at Arfuels.

“We look forward to participating in the continued growth of the Arfuels business as it makes a significant contribution to the development of the biofuels market, and the wider renewable energy sector here in Australia and overseas.”