DENVER, Dec. 10 /PRNewswire-FirstCall/ -- BIOFUEL ENERGY CORP.
(Nasdaq: BIOF stock) announced today that it had reached agreements in principle
with Cargill and the two holders of its subordinated debt. Despite the
significant hedging losses incurred and announced in August, the Company's
operating subsidiaries have remained financially sound and continued to meet
all their obligations. However, the parent company has been unable to make
timely payments to Cargill since August and it failed to make the September
30th interest payment on its subordinated debt. The pending agreements will
resolve all issues relating to these parent company liabilities. The Company
and Cargill were able to establish a debt repayment plan that with recent
payments has reduced the outstanding debt to $11.4 million. Cargill has
agreed to forgo all interest through November 30th, with interest on the
current amounts outstanding to accrue at a 5% per annum rate effective
December 1st.
Simultaneously, the holders of the Company's $20.0 million of subordinated
debt agreed that upon receipt of an initial $2.0 million payment, the
subordinated debt will accrue interest at a 5% per annum rate until Cargill
has been fully repaid and no further payments will be due them until Cargill
has received the next $2.8 million of payments. Previously, the subordinated
debt had borne interest at a 15% rate. The interest rate on the subordinated
debt had increased to 17% on October 6th when a scheduled interest payment was
missed. Finally, Cargill and the subordinated debt holders have agreed that
all future payments due them will be contingent on available cash at the
parent company, to be defined. The agreements are subject to mutually
agreeable documentation, which the Company expects to finalize before year-
end.
Simultaneously, the Company announced that its Wood River, Nebraska plant
had achieved Substantial Completion. Substantial Completion is the second
step in project certification. The Wood River facility has now been running
at capacity for two weeks. The Fairmont, Minnesota plant also attempted
Substantial Completion last week. Unfortunately, it failed to pass due to
continuing issues with its distillers grain dryers. Another attempt at
Substantial Completion has begun. The Company currently expects both plants
to be running at capacity by year-end.
At close of business on December 8th, the Company's operating subsidiaries
had current assets of $36.3 million and working capital before amounts due the
parent company of roughly $15.7 million. Assuming full capacity operations
beginning on January 1st and current spot margins, the Company believes its
operating subsidiaries to be adequately capitalized. Based on recent spot
margins, the Company expects to operate at cash breakeven in the first quarter
prior to debt repayments. The Company's ability to amortize debt or to
achieve profitability will depend on improved industry margins.
This release contains certain forward-looking statements within the
meaning of the Federal securities laws. Such statements are based on
management's current expectations, estimates and projections, which are
subject to a wide range of uncertainties and business risks. Forward-looking
statements should not be read as a guarantee of future performance or results,
and will not necessarily be accurate indications of whether, or the times by
which, our performance or results may be achieved. Factors that could cause
actual results to differ from those anticipated are discussed in our Exchange
Act filings and our Annual Report on Form 10-K.
BioFuel Energy currently has two 115 million gallons per year ethanol
plants in the Midwestern corn belt. The Company's goal is to become a leading
ethanol producer in the United States by acquiring, developing, owning and
operating ethanol production facilities.
Contact: Kelly G. Maguire For more information: Vice President - Finance and http://www.bfenergy.com Chief Financial Officer (303) 592-8110 kmaguire@bfenergy.com
