TROUBLED North-East firm Biofuels Corporation saw its share value drop by more than a quarter yesterday after it gave an update on its debt restructuring plans.

The biodiesel producer, based in Teesside, saw its shares trade at a low of 9p during the day before closing last night at 11.75p - valuing the plc at about £8m.

With debts of about £100m, Biofuels first said in March that it was looking at a range of restructuring options with its banker Barclays.

Yesterday, the company said it expected to restructure its debt in a way that is likely to reduce shareholders' equity and could also lead to its listing on the Alternative Investment Market (A1M) being cancelled.

Billingham-based Biofuels said it had received outline proposals from Barclays, and further discussions with the bank would be held "as soon as possible".

In a statement to the stock market, Biofuels warned: "Shareholders are reminded that in the event that there is any restructuring, they would very likely see their shareholding significantly diluted.

"In addition, any restructuring could lead to the company seeking a cancellation of its listing."

Biofuels floated on the AIM in June 2004 and construction of its biodiesel plant at Seal Sands began the following month. By March 2005, its share price had reached a high of £3.02, valuing the firm at nearly £150m. But the price began to fall through the summer as construction delays and rising costs took their toll.

By the November, Biofuels was forced to suspend trading when it entered into crisis talks with its bank. Barclays agreed to back Biofuels with £92m, which allowed production to begin in March last year, but it failed to find its feet in a difficult market.

Production at the plant has been running at only 25 per cent capacity since January.