Today, Halifax, NS-based CelluFuel Inc. announced that it has completed a $5 million capital raise to begin construction of its demonstration-scale plant for the production of synthetic, renewable diesel fuel from woody biomass. (Note: Innovacorp made a $270,000 equity investment in this round of financing.)

CelluFuel will construct its demonstration plant at the ReNova Scotia Bioenergy site in Brooklyn, NS, which serves as a provincial demonstration centre for companies focused on bioenergy innovation.

"We are extremely pleased with the successful completion of our demonstration project funding effort and excited about the value our new investors bring to our business," says Chris Hooper, president and CEO of CelluFuel.

The announcement comes just 18 months after Hooper and his three founding partners launched the company, which strives to establish an innovative pathway to help the Canadian forestry sector create value—particularly important in the wake of diminished output resulting from challenges in the pulp and paper and building materials sectors. The demonstration project in Brooklyn will procure wood residuals from the local region, create new employment opportunities in Queens County, NS, and serve as a platform for the expansion into commercial-scale projects throughout Canada.

PwC Corporate Finance Inc. was the lead advisor for the private equity raise and assisted CelluFuel with securing the necessary capital. This effort included bringing leading strategic investors into the company, positioning it for long-term success.

"We saw tremendous potential with both the business model and the team that CelluFuel had assembled and we are grateful to have played a role in helping the company achieve this important milestone," says Jeff Dawson, PwC Atlantic Corporate Finance Leader.

One of the principal investors in the transaction is Kingsey Falls, QC-based Boralex (TSE:BLX), one of Canada's leading renewable energy producers. Their expertise and knowledge of the renewable energy industry will be complementary to that of the core CelluFuel team.

"With our investment in CelluFuel, Boralex is strengthening its dedication to the development of renewable energy from sustainable resources and confirms its faith that various sources of wood-residues are to be a part of meeting our energy needs" says Patrick Lemaire, president and CEO of Boralex. "We are enthusiastic about the potential of the collective team that has been assembled."

Another principal investor in the transaction is Chatham, ON-based Tatro Group, which has over 30 years of experience in the commercial trucking industry. This experience will be a tremendous asset to CelluFuel as the majority of diesel fuel in Canada is consumed by the commercial trucking sector.

CelluFuel expects to begin the construction its first commercial scale project within 12 months of commissioning of its demonstration project, and has plans to expand across Canada.

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Emily Abrahams

Abby Yung

Nova Scotia, September 3, 2014