Ethanol hopeful GTL Resources is planning a £13 million placing after starting production in the USA.

AIM-quoted GTL, headed by one-time Lloyd's chief executive Peter Middleton, started ethanol production 'on time and on budget' in late December at its La Rochelle plant near Chicago, with a capacity of 50 million gallons a year. For the year to March, with only three months production of 10.8 million gallons, the company cut its loss from £6.7 million to £1 million on £12.1 million turnover. GTL says that, since then, for April and May combined, earnings before interest, tax, depreciation and amortisation were £2.7 million for 9.7 million gallons.

GTL, whose nominated adviser and broker is the mighty Morgan Stanley, now wants to double La Rochelle’s capacity to 100 million gallons a year and plans to raise ‘in the region of £13 million’ through an institutional placing at a price ‘to be determined’. The company has appointed German investment bank West LB to arrange debt financing of around US$170 million (£85 million) in the US market.

Since its 1998 flotation at 30p, GTL has given investors a switchback ride, surging to £10.50p in 2004 and later crumbling to below £1. With the placing as yet unpriced, the shares now trade at 128.5p, down 5.5p this morning, valuing the company at £29 million, and offer distinctly speculative appeal.