Shares in Velocys PLC (LON:VLS) plunged on Monday after the renewable fuels company said that one of its key partners, Envia Energy, had decided to suspend operations at its Oklahoma City plant and undertake a review of strategic alternatives for the facility.
Envia’s decision follows a leak at the plant in May caused by a failure with the cooling system.
Shares in Velocys, which have fallen from around 24p at the turn of the year, were 14% down at 5.38p in late afternoon trade.
Envia said it was working to assess the likely funding requirements of the plant to achieve positive cash flows, whilst progressing its insurance claims and receiving technical support from Velocys as technology licensor during the insurance process.
The company said it fully supported Envia's decision, given the likely capital requirements of the plant, and that its capital was better invested in progressing its Mississippi biorefinery and UK waste-to-jet projects.
Velocys has a minority shareholding in Evnia and has supported the JV through the advancement of secured loans totalling £15.2mln.
“We are working with Eniva to find a strategic alternative that will realise the maximum value potential inherent in the facility,” CEO David Pummell said in a statement.