"Xynergo is in need of substantial risk capital. Despite a government subsidy program earmarked for second-generation biofuels, which was adopted this fall, it has not been possible to find investors willing to contribute with the necessary risk capital at this point," said Gaute H. Andreassen, chairman of Xynergo's board of directors.
Earlier this year, Norske Skog and co-owners of Xynergo raised new capital to secure operations of the company while Norske Skog and Xynergo tried to find new owners for the biofuel initiative. Norske Skog also made it clear earlier this year that the Group needs to prioritize debt and cost reduction, and would not be able to invest additional capital in Xynergo. Norske Skog and the other owners (Viken Skog, Allskog, Mjøsen Skog, and Statskog) have agreed that there is no basis for continued operations of Xynergo.
The knowledge gained in Xynergo will be leveraged by Norske Skog and the other owners, which hope to use it in relation to other bioenergy projects in Norway and abroad.
Xynergo, established in 2008 with the objective of establishing production of renewable biodiesel and bio-jetfuel based on low quality woody biomass, reportedly needs an estimated NOK 150 million in new capital over the next three years, and another NOK 150 million to the final investment decision for full-scale production facilities. The final investment decision could be made in 2014 at the earliest, due to continued technological development and the need for thorough and comprehensive planning efforts. The company has evaluated different technologies for biofuels production, and has contributed with funding to various research projects in collaboration with Norwegian academic institutions. Xynergo will withdraw all submitted applications for public funding.
TAPPI
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