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Lignol Announces Private Placement Financing of $4.0 million and Conversion of $2,245,770 Convertible Debenture


VANCOUVER, Nov. 16, 2012 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("LEC" or the "Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, is pleased to announce that it has engaged Canaccord Genuity Corp. ("Canaccord" or the "Agent") to sell, on a commercially reasonable efforts basis, up to 26,666,667 Units (the "Units") of the Company at a price of $0.15 per Unit (the "Issue Price") for aggregate gross proceeds of up to $4,000,000 (the "Offering"). The Offering will include Global Securities Corp. and Haywood Securities Inc. Each Unit will comprise of one common share of the Company and one-half of one common share purchase warrant (each whole such warrant, a "Warrant"). Each whole Warrant will allow the subscriber to purchase one additional common share of the Company for a period of two years from the date of closing at an exercise price of $0.20 per share.

The Company has granted the Agent an option to offer up to an additional 6,666,667 Units of the Company, at the Issue Price, for additional gross proceeds of up to $1,000,000, exercisable in whole or in part at any time up to 48 hours prior to the closing date of the Offering.

Upon closing of the Offering, Wasabi Energy Limited has agreed to convert the convertible debenture it currently holds which will result in the issuance of 14,971,800 common shares of the Company at an exercise price of $0.15 per share. Accrued interest of 7.0% per annum from the date of issuance of the convertible debenture (August 27, 2012) to closing of the Offering will be paid in common shares at the market price (as defined in the TSX Venture Exchange Corporate Finance Manual) on the date of the closing of the Offering.

"This financing, together with the conversion of the Wasabi debenture, improves our balance sheet and enables us to accelerate the commercialization of our technology  while enhancing our ability to obtain equity interests in energy related projects that have commercial and technical synergies with our business" said Ross MacLachlan, Lignol's CEO.

It is anticipated that insiders of the Company may subscribe for greater than 25% of the Offering. The issuance of Units to insiders pursuant to the Offering is considered to be a related party transaction subject to TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101. LEC intends to rely on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(a) and 5.7(a) of Multilateral Instrument 61-101 on the basis that participation in the Offering by insiders will not exceed 25% of the fair market value of the Company's market capitalization.

LEC intends to use the net proceeds from the Offering to fund general working capital and other corporate purposes.

The Offering is expected to close on or about December 7, 2012.  The Units issued upon the closing of the Offering will be subject to a 4-month hold period. The securities offered hereby have not and will not be registered under the United States Securities Act of 1933 (the "1933 Act") and may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the 1933 Act) unless the securities have been registered under the 1933 Act, or are otherwise exempt from such registration.  The Offering is subject to receipt of all necessary regulatory approvals, including the TSX Venture Exchange.

About Lignol Energy Corporation ("LEC")

LEC (TSXV: LEC) currently owns a 14.9%(1) stake in Australian Renewable Fuels Ltd (ASX: ARW) and owns 100% of the issued and voting shares of Lignol Innovations Ltd. ("Lignol"). LEC also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology.

ARW is the largest biodiesel producer in Australia owning three plants with a total nameplate capacity of 150 million litres per annum. ARW's three plants were built at an aggregate cost of approximately A$150 million. ARW has made significant changes in recent years to become a cost effective producer of high quality biodiesel to address growing biofuel demand in the Australian market.

(1) On November 15, 2012, ARW announced a transaction which will provide approximately AUD $14 million in cash to ARW in exchange for the issuance of ordinary shares of ARW, resulting in LEC's equity interest, post closing, to be approximately 10% of ARW.

More information on ARW can be found at their website; www.arfuels.com.au.

Lignol is a 100% owned subsidiary of LEC. Lignol is a leading technology company in the advanced biofuels and renewable chemicals sector undertaking the development of biorefining technologies for the production of advanced biofuels, including fuel-grade ethanol, and other renewable chemicals from nonfood cellulosic biomass feedstocks. Lignol's modified solvent based pretreatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including high purity HP-LTM lignins. HP-LTM lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin byproducts generated from other processes. Lignol is executing on its development plan through strategic partnerships to further develop and integrate its core technologies on a commercial scale. For more information please visit Lignol's website at www.lignol.ca.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Caution concerning forward-looking statements:

Certain statements contained in this document may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about our ability to work with Canaccord and to close on a private placement financing, the conversion of the convertible debenture held by Wasabi Energy Limited, the transaction entered into by ARW and the resulting change to the LEC equity interest in ARW and to continue as a going concern and to raise additional financing to fund the operations of LEC and Lignol, the development status of Lignol's fully integrated pilot scale biorefinery in Burnaby, British Columbia, the planning and development of a commercial plant, Lignol's ability to complete project deliverables which are funded in part by government agencies, obtaining strategic partnership investments and government funding for initial commercial projects. Often, but not always, forward looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Such statements or information reflect LEC's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, our ability to establish the validity of Lignol's technology at the fully integrated biorefinery pilot plant scale, Lignol's ability to satisfy the conditions of existing government grants and to obtain new additional grants, our ability to continue to finance our operations and to finance and complete the development of a commercial project, Lignol's ability to work with Novozymes to produce cellulosic ethanol at production costs competitive with gasoline and corn ethanol, Lignol's ability to develop products and to obtain off-take agreements, our ability to obtain requisite regulatory approvals and our ability to enter into agreements with strategic partners on terms acceptable to us, the inability to influence the strategy, operations and financial performance of Australian Renewable Fuels Limited ("ARW"), the reliance on publically available information of ARW in the Company's evaluation of its acquisition of shares in ARW, the potential inability to divest the ARW ordinary shares due to modest trading volumes, the cost of future ARW capital investment, the fluctuation of biodiesel and feedstock prices on ARW, the effect on ARW of changes in government policy relating to the environment, and incentives for renewable fuels. Many factors could cause LEC's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, the technological challenges that remain to be surpassed in obtaining the necessary operating data from Lignol's fully integrated biorefinery pilot plant that is required prior to completing the next scale-up of the technology, financial market conditions which will impact our ability to finance our operations and to finance the construction and operation of a commercial plant, the price of gasoline and demand for ethanol, the market pricing and demand for renewable chemicals, risks relating to the protection of Lignol's core technology from infringement and those risk factors which are discussed elsewhere in documents that LEC files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended planned, anticipated, believed, estimated or expected. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

SOURCE Lignol Energy Corporation

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