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Lignol Energy Corporation Increases its Equity Stake in Australian Renewable Fuels Limited

VANCOUVER, Feb. 12, 2013 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("LEC" or "the Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, today announced its participation in a Private Placement and Rights Offering financing undertaken by  Australian Renewable Fuels Limited (ASX: ARW) which will result in LEC becoming one of the largest shareholders in ARW.

On February 7, 2103, ARW announced that its proposed takeover bid for all of the outstanding shares of Wentworth Holdings Limited (ASX: WWM) ("Wentworth") is expected lapse on February 15, 2013.  ARW announced it had instead proposed an alternative capital raising mechanism to raise A$12.3 million at A$0.007 per share, comprising an immediate private placement of A$4.27 million (the "ARW Placement") and an underwritten rights offering of A$8 million to ARW shareholders at A$0.007 per share with the ability of shareholders to apply for oversubscriptions (the "ARW Entitlement Offer").

The ARW Placement of A$4.27 million successfully closed on February 12, 2013 and the ARW Entitlement Offer is expected to close on March 5, 2013. Through these transactions, LEC intends to make a further investment in ARW of approximately A$2.67 million and acquire a further 381,660,715 million ordinary shares in ARW as follows:

      (i)   178,571,429 ordinary shares were acquired through the ARW Placement; and 
           
      (ii)   203,089,286 ordinary shares are expected to be acquired through LEC's participation rights in the ARW Entitlement Offer.
           

Upon completion of these two transactions, LEC expects to hold a total of 744,660,715 ordinary shares of ARW, or approximately 17.75% percent of ARW.

Furthermore, in connection with the ARW Entitlement Offer, Wentworth and Thorney Holding Pty Ltd. ("Thorney") have agreed to underwrite any shortfall under the ARW Entitlement Offer.  Subject to the completion of definitive documentation, LEC has committed to participate in the underwriting obligation with Wentworth and Thorney up to a maximum of A$1.75 million. Should the ARW Entitlement Offer not be fully subscribed, then LEC will have an obligation to acquire further shares of ARW.

The above transactions will be funded by the Company's existing cash and by a proposed line of credit of C$5 million to be provided by one of LEC's major shareholders, Difference Capital Funding Inc. ("DCF").  It is currently proposed that DCF will provide LEC with a line of credit bearing interest at 8% per annum on the drawn amount. The term of the credit facility will be the earlier of one year or until completion of a further equity financing.  Funds drawn on this facility will be secured on a sole recourse basis against all of the ARW ordinary shares owned by LEC.

About Lignol Energy Corporation ("LEC")

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

LIL 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 non-food cellulosic biomass feedstocks. LIL's modified solvent based pre-treatment 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 by-products generated from other processes. LIL 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.

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. ARW has recently announced proposed transactions to raise a combined A$12.3 million in cash through a placement and an entitlement offer.  More information on ARW can be found at their website; www.arfuels.com.au

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 LEC's ability to participate in and ARW's ability to close on its planned financing, the availability of a sufficient number of undersubscriptions to allow LEC to subscribe for the oversubscriptions described above and LEC's ability to finance such acquisitions of shares of ARW using funds to be made available by Difference Capital, LEC's and Difference Capital's ability to agree to the terms of a line of credit prior to the closing of the ARW Entitlement Offer,  the Company's plans with respect to its investment in ARW,  the Company's ability to continue as a going concern and to raise additional financing to fund the operations of LEC, LIL, and its proposed investments in ARW, the development status of LIL's fully integrated pilot scale biorefinery in Burnaby, British Columbia, the planning and development of a commercial plant, LIL'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, LEC's ability to raise additional capital to fund the investments in ARW, and LEC's and LIL's working capital, our ability to establish the validity of LIL's technology at the fully integrated biorefinery pilot plant scale, LIL'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, LIL's ability to work with Novozymes to produce cellulosic ethanol at production costs competitive with gasoline and corn ethanol, LIL'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 ARW, the reliance on publicly 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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