Operational Bio Fuel Plant Looking for 5M

[HiTech Capital 0]

We are involved with a company (CWT) that spent over $140m developing the technology and purchasing the equipment to make biofuel from various wastes, and built their first commercial scale plant in Missouri.

 

The Company attempted to raise capital through an initial public offering of its shares on the New York Stock Exchange. Led by Hambrecht, the IPO was scheduled to occur in February 2009, however, the IPO failed on the eve of issuance primarily due to then current market conditions after the failed IPO they filed Chapter 11, in large part to get out from under a ridicules feedstock contract. They have no debt, as the project was built with no project financing, 100% equity.

 

Through the Bankruptcy Court, we have filed a new business plan and currently have the opportunity to acquire a controlling interest (65-80%) of the company with an investment of $5 million. We can invest 2M of the 5M (working capital only) needed.

 

We will initially be a Debtor in Possession (DIP loan) Our LLC is investing in a DIP loan to CWT. The loan would be to our LLC, and it would have a first lien on the DIP loan. The DIP loan in turn would have a first lien on all the assets of the company, including the plant. But the plant is on a piece of property that is leased from the poultry processing plant. So no lien is given on that.

 

Within a few months, we expect the plan of reorganization to be approved by the Creditors and the Court, and at that time our DIP would change into ownership of the company. We could simultaneously convert then this loan into a loan with normal liens on the assets themselves.

 

As soon as we bring the emerging (New) company out of Bankruptcy, (2-3 months) We qualify for a stimulus loan guarantee from the USDA (rural area) for 80% of the project cost. This could be used to take out any lending we procure for our initial business plan.

 

The scrap value of the plant, (ignoring any technology or operational value) is in excess of $5 million. Current book value of the total plant is around $25M. The plant can be brought into profitability under the new business plan accepted by the trustee within a few months in excess of $10m annually after six months operation.

 

Our own technical/operational team has done a lot of due diligence on the technology and the plant itself, and found it to be new, state of the art equipment in current operation.

 

Currently there is an additional $1.2M of produced fuel sitting in barrels at the plant ready for delivery and we have plans to take advantage of the 140M in NOLs.

 

JV Partner/lender/investor could have first position.

 

We are looking for 3M on 25M in assets (over $5m scrap value) with a guarantee from the USDA for 80% of the project cost in 90 days. I think that about covers any exit strategy.

 

Lender could also convert to equity if things are as advertised.