RVA Renova

RNS Number:4958R
Renova Energy plc
03 April 2008



For immediate release                                               3 April 2008


                 Renova Energy plc ("the Company" or "Renova")

                          Funding and operating update

Renova Energy plc (RVA:AIM), the ethanol production, distribution and marketing
company, today provides an update on its funding requirements and current
operations.


Funding update

As previously announced, on 17 December 2007 Renova suspended construction of
its integrated 21 MMgal/yr ethanol production facility and 3.2 MW
waste-to-energy power plant at Heyburn, Idaho, following the identification of
cost overruns. On 8 February 2008, the Company entered into a Standstill
Agreement with its banks under which the banks agreed not to exercise their
rights relating to certain breaches of banking covenants by the Company that
resulted from the suspension of the Heyburn project.

The engineering consultants engaged by the Company to re-plan and re-evaluate
the costs of the Heyburn project have completed this exercise and, taking into
account remobilisation costs and other incremental costs arising from the
suspension of the project, the total project cost is now estimated to be $60.1
million, comprising $45.2 million for the ethanol plant and $14.9 million for
the power plant. At the time of suspension the project was approximately 75%
complete based upon the value of work completed.

The Company's efforts to raise additional funding to complete the project have
been adversely affected by the current conditions in the global credit and
equity markets and high raw material costs that are impacting on the bio-fuel
industry as a whole, but the Company continues to investigate alternative
funding sources to complete the Heyburn project.

The Company has delivered a proposal to the banks to restructure its debt
facilities and discussions on this proposal and an extension to the Standstill
Agreement, which expired yesterday, are ongoing. The Company will provide
further updates on these discussions as soon as appropriate.


Current trading

The Company's marketing and distribution business is continuing to achieve
strong growth with sales for the year ended 31 March 2008 estimated at 14.5
MMgal, compared to 10.5 MMgal in the year ended 31 March 2007, representing
year-on-year growth of 37%. The average realised ethanol price in the year ended
31 March 2008 was 3% higher than the previous year at $2.28/gal (2007 - $2.22/
gal). During the last quarter in particular, new business from existing
customers and new customers accelerated sales growth with annualised volumes now
running at in excess of 20 MMgal/yr.

The production optimisation project at Renova's facility in Torrington, Wyoming,
to increase production capability from approximately 7 MMgal/yr to in excess of
10 MMgal/yr is nearing completion with the final phase scheduled for completion
in mid-April 2008. Production rates and alcohol yields are already showing
significant step-improvements with current production equivalent to
approximately 9 MMgal/yr.


Commenting on this, Chris Thomas, Chairman, said:

"Renova's core production and marketing business continues to expand with strong
sales growth, which exceeded management's expectations for the full year. We
look forward to an imminent and sustained increase in production capability at
our Torrington facility as the de-bottlenecking programme also nears completion.

In what is a very difficult economic environment generally, and for the
bio-fuels sector in particular, in which to raise additional capital from
traditional sources we are continuing to investigate a number of alternative
funding arrangements to complete the Heyburn project.  In the meantime we are in
ongoing discussions with our lenders to restructure the existing borrowings."


For further information please contact


Renova Energy
Chris Thomas, Chairman                                  +44 207 299 4444
Fanton Chuck, Chief Executive Officer                   +44 207 299 4444
Raf Alam, Finance Director                              +44 207 299 4444

Brewin Dolphin
Ken Fleming/Jamie Cumming                               +44 845 213 1120

Buchanan Communications
Ben Willey                                              +44 207 466 5000


or visit www.renovaenergy.com


Glossary: bu - bushel; MMgal - million gallons; MMgal/yr - million gallons per
year



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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