The funds are to be used to establish a new biodiesel plant at Picton near Bunbury, Western Australia. Production is due to commence in March 2006.

Construction of ARF’s first biodiesel plant in Adelaide has already begun, with production due to start in November 2005. Combined production from the two facilities is projected to be 90 million litres of biodiesel a year.

"The development of ARF and the Australian biofuels industry has been a long-term vision for the company’s founders and directors for many years," Amadeus company secretary and executive director Caroline Bentley said.

"ARF’s business model recently received strong endorsement from the Federal Government with the awarding of a A$7.15 million grant under the Commonwealth’s Biofuels Capital Infrastructure Grant Scheme for the Adelaide plant."

ARF's plants were based on proven technology supplied under licence by Austrian-based company Energea, Bentley said.

"ARF plans to selectively roll out additional plants in line with the continued growth in the biodiesel market in Australia," she said.

The ARF capital raising was completed through a placement of non-interest bearing convertible notes to institutional and sophisticated clients of SHAW Stockbroking Limited.

ARF intends to list on the ASX in the first quarter of 2005 and the convertible notes will mandatorily convert into ordinary shares at IPO.

ARF plans to issue a prospectus to raise A$15 million at IPO. Part of the offer proceeds will be used to replace a finance facility of A$6.5 million provided by Amadeus.

The expected market capitalisation of ARF at IPO is A$105 million. Amadeus’ holding will be diluted from its current 67% to about 34% after the completion of the IPO.