Scotia Atlantic Biomass receives fibre inventory loan
Scotia Atlantic Biomass, a wholly owned subsidiary of Viridis Energy, has received a working capital loan of $2 million (€1.9 million) from Cornwall Investments, which will be used to procure Nova Scotia wood fibre for the production of its industrial pellets.
The loan is secured by inventory in the form of a demand note with interest calculated daily and compounded monthly at the rate of 10%.
Christopher Robertson, Viridis Energy CEO, says: 'Scotia Atlantic has been purchasing fibre as needed from cash flow, which limited its ability to inventory lower priced material as seasonal supply and demand influences impacted prices. This funding will allow us to accumulate up to a 90-day supply of low cost fibre inventory when it becomes available, which should decrease Scotia Atlantic's average cost of goods sold and improve its gross margin.'
In addition to the fibre inventory loan, Cornwall also holds a $3.1 million mortgage (including accrued interest) at 9% with Scotia Atlantic and a general security agreement and first charge on all property, plant and equipment. In the fourth quarter of 2014, Cornwall also provided the Company a $2.5 million line of credit for working capital purposes.
SOURCE: Viridis Energy