Auditor Questions Verenium’s Ability to Continue

Posted on March 17, 2009. Filed under: Advanced Biofuel, Field-to-Pump | Tags: , , , , , |

Auditor Questions Verenium’s Ability to Continue
By DIRK LAMMERS
Associated Press
March 17, 2009

An outside auditor for Verenium Corp. said in a filing Monday that the advanced biofuels company may have to “curtail or cease operations” if it cannot raise additional capital.

Verenium shares fell 5 cents, or 12.8 percent, to 34 cents in morning trading Tuesday. The stock has traded between 25 cents and $4.13 during the past year, and is off nearly 56 percent since January.

Cambridge, Mass.-based Verenium and oil giant BP PLC plan to build a $300 million biorefinery in Highlands County, Fla., capable of producing 36 million gallons a year from sugarcane and other cellulosic plant waste.

Verenium, in an Ernst & Young audit opinion included in a year-end report filed with the Securities and Exchange Commission on Monday, said its operating plan and existing working capital deficit raises doubt about its ability to continue.

“We continue to experience losses from operations, and we may not be able to fund our operations and continue as a going concern,” Verenium said in the filing.

The company said it will need additional capital to fund operations, including about $300 million to complete its commercial cellulosic ethanol plant with BP.

Verenium said it believes it will be able raise additional cash through corporate partnerships and collaborations, federal and state grants and loan guarantees. It also will consider seeking additional project financing, including nonrecourse debt, product sales, selling or financing assets, and, if necessary and available, the sale of equity or debt securities.

“We will need additional capital in the future,” the company said. “If additional capital is not available, we may have to curtail or cease operations.”

If the company is unable to secure additional financing, options include: reducing capital expenditures, scaling back development of new enzyme products, scaling back efforts to commercialize cellulosic ethanol, significantly reducing its work force, selling some or all of its assets and seeking to license products and technologies that it would otherwise seek to commercialize itself.

On Feb. 27, Verenium shares lost two-thirds of their value as the company reached a conversion price reset on some senior convertible notes it warned could result in a material reduction of its cash resources.

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    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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