Infinity has 180 days to recover

By David Blackwell
Published: May 21 2009 03:00

Infinity Bio-energy, the ethanol producer, is considering cancelling its Aim listing after its operating subsidiaries filed for judicial recovery in Brazil.
The company raised £270m when it joined Aim in 2006 as one of Collins Stewart's special purpose acquisition corporations (spacs). Collins Stewart brought the US concept of spacs - cash shells by another name - to Aim from the US.
Infinity's shares were suspended at 4 cents, giving it a market capitalisation of $4.3m (£2.7m). Just over a year ago the company was issuing shares at $5.20 each as part of the consideration for some of its acquisitions. In July it raised a further $38m through a mix of equity at $5 a share and convertible notes.
But the shares tumbled in September after the company reported a setback in milling the last sugar harvest because of delays in receiving equipment. It said yesterday that the situation had "been compounded by the international financial crisis and the difficulties the sugar and ethanol sector in Brazil has been facing".
Judicial recovery appears to be the Brazilian equivalent of the US Chapter 11 filing for protection from creditors. It is intended to facilitate the restructuring of economically viable businesses experiencing temporary financial difficulties. It will give the company 180 days to finalise a recovery plan for approval by its creditors.
The company said it was in talks about restructuring its debt and its business, which owns five mills in the Brazilian states of Mato Grosso do Sul, Minas Gerais and Espirito Santo. It would "need to raise capital to fund its ongoing working capital needs and to repay its debt obligations".
It would be implementing a strategic review to consider "whether to take steps to put a resolution to the company's shareholders to request the cancellation of the listing" on Aim.
Investors in a spac expect the funds raised to be quickly spent on acquisitions to fulfil a specific plan.
Copyright The Financial Times Limited 2009