how stable is the arw register?

Lignol Energy Corporation is searching for money after booking a $C9.6m loss for the nine months ended January 31.

Vancouver-based Lignol owns 21pc of ARW and claims to be the "largest single direct shareholder".

However interests associated with billionaire Melbourne investor, Alex Waislitz, together control 26.9pc.

Questions arise:

. Is Waislitz considering buying out Lignol?

. If Waislitz chooses not to, who/what might?

. And if no-one's interested what can Lignol do?

. Hold on indefinitely?

. Feed its shares into the market?

An issue facing Lignol is that the ARW market is thinly-traded, if not illiquid.

A gradual sell-down would risk depressing the price of all holdings - including those associated with Alex Waislitz.

In a statement issued earlier this month, LEC notes that it's made investments in three renewable biofuels companies which collectively own six plants.

While each represents an opportunity to create shareholder value, LEC’s immediate priority is to complete a financing and allocate capital largely for the restart of its 140 million litres per year biodiesel plant in Darwin.

"LEC is currently the largest single direct shareholder in ARW with an ownership interest of 21pc," directors say.

"LEC does not have any influence over the affairs of ARW and does not have board representation."

Noting that ARW’s Interim financial report for the half year ended December 31 2013 disclosed a loss of $A2.3 million compared with a profit of $A1.4 million in the same period in 2012, directors add:

"The share price of ARW has declined considerably over the past year.

"We continue to be optimistic that commercial synergies would be worth developing with ARW and our other Australian biodiesel interests, however to date we have been unsuccessful in this regard."

Directors go on to note that, as of January 31, 2013, LEC’s cumulative cost of investment in ARW was $C10.1 million compared with the quoted market value of the ARW shares the company holds of $C5.9 million.

"Given the decline in market value of the Company’s investment in ARW, an impairment loss of $C3.1 million was recorded during the quarter, while $C1.5 million was reversed from other comprehensive loss."

LEC's loss of $C9.6 million in the nine months to January included $C2.3 million related to costs incurred in developing the Darwin project.

Negative cash flow from operations totalled $C5.2 million and negative working capital totalled $C13.3 million.

Historically the company has had operating losses, negative cash flow from operations and working capital deficiencies, directors say.

"The company must raise sufficient capital and execute on its commercialization plans in order to achieve positive cash flows from operations.

"Otherwise the prospects for the company to continue as a going concern are uncertain."