BARCLAYS has thrown green fuels firm Biofuels Corporation a financial lifeline as it battles to survive with debts of £100m.

The Teesside biodiesel producer yesterday said the bank had made additional facilities available until the end of the year, including a £7m cash boost.

The announcement caused Biofuel's share price to jump 41 per cent to 13.75p by mid-morning - its highest level for the past week and up from 9.75p at close on Thursday.

In a statement to the stock market, Billingham-based Biofuels said Barclays remained "supportive", and had extended its on-demand banking facilities to December 31.

The bank has also agreed to provide £7m for working capital and fixed capital purposes, which Biofuels expects will be "sufficient" for its interim requirements.

Barclays has also delayed the date it wants Biofuels to re-start interest payments on debts of about £100m to the end of December, having previously deferred payments to June 30.

The figures still fall short of the £16m to £25m Biofuels originally estimated it would need to survive against the backcloth of a weaker market and rising costs.

However, the announcement came as a relief to shareholders, who had seen the value of the company cut by almost a quarter on Tuesday and continue to fall on Wednesday and Thursday.

It followed a financial update by Biofuels on Tuesday, which said it was considering "outline proposals" from Barclays.

At the time, it said it may restructure its debt in a way that is likely to reduce shareholders' equity and could lead to its listing on the Alternative Investment Market being cancelled.

Mark McMullan, an investment manager in the Teesside office of Wise Speke, yesterday said: "At one point it was looking like the company was going bust, or in really serious financial difficulty."

"With Barclays extending the loan facilities for another six months they obviously have some faith in the company. Biofuels is not out of the woods yet, but Barclays has given them a bit of breathing space."

Last night, Biofuels' share price closed at 14.25p.