Newton Independent

REG owned, managed biofuel plants receive $1.6 million in federal incentives

Newton Independent

Renewable Energy Group and third-party plants it manages in Iowa have been awarded more than $1.6 million by the Iowa Department of Agriculture to advance biofuel production.

The awards were given through the USDA's Office of Rural Development in its Bioenergy Program for Advanced Biofuels.

"It's great to see the Department of agriculture working with these Iowa biofuel companies to help lessen our dependence on foreign oil by continuing to develop advanced biofuels here at home," said Sen. Charles Grassley, R-Iowa, in a press release today announcing the awards.

Central Iowa Energy of Newton, now known as REG Newton after shareholders voted to consolidate with REG, was awarded $114,239.69 in economic incentives. REG Ralston and REG Houston will receive more than $727,000.

Three third party plants managed by REG also received awards. Iowa Renewable Energy in Washington was granted more than $216,000 in incentives and Western Dubuque Biodiesel received more than $253,000. Western Iowa Energy in Wall Lake, whose shareholders voted down REG's consolidation plan, will receive more than $298,000.

Three other biofuel companies in Iowa - Maple River Energy in Galva, Riksch Biofuels in Crawfordsville and Sioux Biochemical in Sioux Center - receive approximately $25,000 combined of the total $1,644,242.64 in economic incentives.

Also today, REG announced that its recent consolidation of the biodiesel plant in Newton and another in Danville, Ill, now make the company the largest wholly-owned biodiesel manufacturing business in North America with total capacity of 122 million gallons a year. You can read that release here.

Western Iowa Energy says no to REG sale

Newton Independent

Unit holders of Western Iowa Energy in Wall Lake voted against Renewable Energy Group's proposal to purchase the biodiesel facility, one of three struggling plants the Ames-based firm was in negotiations to buy.

The negative vote of its shareholders went against the recommendation of its board of directors.

Last week, unit holders of Central Iowa Energy, the financially-troubled Newton biodiesel plant, agreed to sell virtually all of the company's assets and liabilities to REG as part of an asset purchase agreement first proposed last May.

Members of Blackhawk Biofuels in Danville, Ill., also agreed to a sale. All three entities are managed by REG.

Since its inception in 2007, Central Iowa Energy has incurred loses totaling $14.9 million.

Central Iowa Energy unit holders agree to sale to REG

By PETER HUSSMANN

Unit holders of Central Iowa Energy, the financially-troubled Newton biodiesel plant, agreed on Wednesday to sell virtually all of the company's assets and liabilities to Renewable Energy Group of Ames as part of an asset purchase agreement first proposed last May.

In addition, unit holders of the company that has lost $14.9 million from operations since commencing biodiesel production in 2007 have agreed to dissolve the company as soon as reasonably practicable following the completion of the sale.

More than 80 percent of the share votes cast approved the proposals, according to a Securities and Exchange Commission filing issued after the close of the markets today.

Under the consolidation agreement, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of 4.4 million shares of common stock and 164,000 shares of preferred stock in the new company being formed by the consolidation. However, plans call for shares to be used to satisfy outstanding claims owed by Central Iowa with proportionate distribution of the new company's shares made only after those claims are satisfied. Upon closing, Central Iowa unit holders will hold in aggregate 1.2 percent of the new company's preferred stock and 11.8 percent of its common stock shares.

In addition to assuming control of Central Iowa, REG is also involved in proposals to assume control of two other biodiesel plants, Western Iowa Energy in Wall Lake and Blackhawk Biofuels in Danville, Ill. REG currently manages the operations of all three plants. REG hopes to have all the agreements in place by the end of February.

The Iowa Power Fund recently approved a $3.8 million grant that will aid Elevance Renewable Sciences, an Illinois company working in conjunction with REG, to add test technology to the Newton biodiesel plant to turn feedstock oils and animal fats into specialty chemicals and jet fuels.

The state grant is in addition to a $2.5 million U.S. Department of Energy grant previously announced for development of the pilot project at the Newton plant.

A copy of the release on the asset purchase sale posted on the Central Iowa Energy Web site can be read here.  

Central Iowa shareholders vote today on consolidation plan; losses mount

By PETER HUSSMANN

Unit holders voting today on Central Iowa Energy's planned consolidation with Renewable Energy Group and the Newton company's subsequent dissolution and liquidation were greeted with more bad financial news coming within the company's first quarter financial statement.

In a Securities and Exchange Commission filing late Tuesday, Central Iowa reported a net loss of $653,237 for the three-month period ending Dec. 31, 2009. Since beginning production in 2007, the biodiesel manufacturer has recorded total losses of $14,982,729, the SEC filing states.

Like financial reports before, the company continues to be hurt by the lack of available cash to independently produce biodiesel. It's only production for the quarter came under a tolling agreement with REG Marketing. For the quarter, the company produced 2.8 million gallons of biodiesel, just 39 percent of its nameplate 30-million-gallon-a-year capacity.

Under the consolidation agreement, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of 4.4 million shares of common stock and 164,000 shares of preferred stock in the new company being formed by the consolidation. However, plans call for shares to be used to satisfy outstanding claims owed by Central Iowa with proportionate distribution of the new company's shares made only after those claims are satisfied. Upon closing, Central Iowa unit holders will hold in aggregate 1.2 percent of the new company's preferred stock and 11.8 percent of its common stock shares.

Until Central Iowa is dissolved and its existence is terminated after closing the asset purchase agreement, REG has agreed to pay "certain mutually agreeable ongoing costs" related to Central Iowa Energy for a period of up to six months.

The filing notes that Jasper County could force the company to pay the $745,000 cost of bringing sewer lines to the facility due to its default on the private redevelopment agreement provisions regarding job creation, timely filing of an annual report and payment of property taxes. Late last year Central Iowa paid its first half property tax payment in the amount of approximately $130,000. The financial report notes the company does not have cash on hand to pay the obligation should the county seek its allowable remedies.

The company is also in noncompliance with the Iowa Department of Economic Development on repayment of a $300,000 zero interest loan ($292,400 is still owed) and a $100,000 forgivable loan, again for not meeting job creation criteria. The company fell 14 percent short of its job creation requirement and owes the IDED $14,000 on the forgivable loan.

In addition to assuming control of Central Iowa, REG is also involved in proposals to assume control of two other biodiesel plants, Western Iowa Energy in Wall Lake and Blackhawk Biofuels in Danville, Ill. REG currently manages the operations of all three plants. REG hopes to have all the agreements in place by the end of February.

Shareholders to vote next week on Newton biodiesel plant's consolidation with REG

By PETER HUSSMANN

Investors in Newton's biodiesel plant, Central Iowa Energy, will meet next Wednesday to vote on a plan to consolidate its operations with Renewable Energy Group, one of three consolidations the Ames-based company and largest supplier of biodiesel in the U.S. hopes to have completed by the end of the month.

Shareholders will vote on the proposed consolidation with Renewable Energy and Central Iowa's subsequent dissolution and liquidation at a special meeting on Feb. 17. The actions take separate votes of the shareholders.

Under the plan, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of shares in the new company being formed by the consolidation. However, plans call for shares to be used to satisfy outstanding claims owed by Central Iowa with proportionate distribution of the new company's shares made only after those claims are satisfied.

At least one outstanding claim has now been satisfied. On Dec. 31, Central Iowa paid its delinquent September county tax bill of $123,721 plus $5,567 in accrued interest.

In addition to assuming control of Central Iowa, REG is also involved in proposals to assume control of two other biodiesel plants, Western Iowa Energy in Wall Lake and Blackhawk Biofuels in Danville, Ill. REG currently manages the operations of all three plants.

Since beginning production in 2007, Central Iowa has lost $14.3 million from operations.

Newton biodiesel plant unitholders hear presentation on consolidation with REG

By PETER HUSSMANN

Unitholders of Central Iowa Energy, the financially-struggling Newton biodiesel plant, met at Newton Senior High School Wednesday evening to hear a presentation on the proposal to consolidate the company with Renewable Energy Group of Ames.

Under the plan, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of shares in the new company being formed by the consolidation. However, plans call for a portion of the shares to be used to satisfy outstanding claims owed by Central Iowa with distribution made to untholders only after those claims are satisfied.

The informational meeting was held in advance of a meeting set for Feb. 17 where Central Iowa unitholders will be asked to vote on the proposed consolidation with Renewable Energy and Central Iowa's subsequent dissolution and liquidation. The actions take separate votes of the shareholders.

A Securities and Exchange Commission filing today  outlined information provided to Central Iowa unitholders at Wednesday's meeting. REG officials were on hand to provide an overview of the current state of the biodiesel industry, its strategy to continue as a leading manufacturer, marketer and distributor of biofuels and specialty chemicals, the benefits of the consolidation from an operations and management standpoint, cost advantages, access to capital and how the new operation would be structured.

An updated business-combination transaction communication concerening the consolidation was filed this afternoon. 

In addition to Central Iowa's proposed consolidation with REG, plans call the Ames-based company to consolidate with two other biodiesel plants, Blackhawk Biofuels of Danville, Ill, and Western Iowa Energy of Wall Lake. Each of the company's are currently independently owned and governed but are managed by Renewable Energy Group.

The big news of the evening, however, was likely the Environmental Protection Agency's decision on Wednesday saying that soybean produced diesel counted as an advanced biofuel, a move that is expected to provide a boost to the struggling industry. Congress is also expected to act early this year to revive the $1-a-gallon tax credit on biodiesel production, a benefit that expired at the end of last year.

Since going on-line in 2007, Central Iowa Energy has lost $14.3 million from operations.

REG plans informational presentations with unitholders of Western Iowa Energy and Blackhawk Biofuels today. A meeting with REG shareholders on the consolidation plan is set for Saturday.

REG already has plans to retrofit the Newton biodiesel plant into a biorefinery demonstration facility. With the help of a $3.9 million grant from the Iowa Power Fund, REG plans to collarborate with Illinois-based Elevance and Technochem to demonstrate the ability to convert existing biodiesel facilities with bolt-on technology to produce diversified bio-chemical products, such as jet fuel, through the use of Iowa feedstocks.

You can read about the December announcement of the grant award here.

Central Iowa Energy to hold informational meeting on proposed consolidation, liquidation

By PETER HUSSMANN

Shareholders of Central Iowa Energy, the financially-troubled Jasper County biodiesel plant, are being invited to an informational meeting early next month to hear details on the planned consolidation of the company with Renewable Energy Group of Ames.

In a Securities and Exchange Commission filing entered following the close of business on Friday, Central Iowa noted that it has set a special meeting for 6:30 p.m. on Wednesday, Feb. 3, at Newton High School to allow shareholders an opportunity to hear details on the proposed transaction. Representatives of REG, as well as CIE's financial advisers, will be on hand to give a presentation. Time will be allowed for shareholders to ask questions, the filing said.

The filing also stated that shareholders will vote on the proposed consolidation with Renewable Energy and Central Iowa's subsequent dissolution and liquidation at a special meeting on Feb. 17. The actions take separate votes of the shareholders.

Under the plan, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of shares in the new company being formed by the consolidation. However, plans call for the shares to be used to satisfy outstanding claims owed by Central Iowa with distribution made only after those claims are satisfied.

In addition to assuming control of Central Iowa, REG is also involved in proposals to assume control of two other biodiesel plants, Western Iowa Energy and Blackhawk Biofuels.

Friday's SEC filing also included notification of REG's filing of a registration statement that included a definitive proxy statement. The proxy will be mailed to CIE shareholders in the near future.

The 300-page plus proxy statement includes a termination fees provision that would require Central Iowa Energy to pay REG $1 million in cash within 10 days should the agreement be terminated due to CIE's board of directors changing its favorable recommendation on the consolidation. Reverse termination fee provisions are also included favoring CIE shareholders.

Since its inception in 2007, Central Iowa Energy has lost $14.3 million from operations.

Consolidation of Newton biodiesel plant with REG going slower than expected

By PETER HUSSMANN

Unit holders of Newton's biodiesel plant were told a recent mailing they received seeking taxpayer identification information as part of Central Iowa Energy's consolidation with REG was sent prematurely and should be disregarded, a letter from the plant's general manager states.

Shareholders of Central Iowa had been asked to return W-9 forms to Registrar and Transfer Company, the transfer agent hired by REG to assist with its consolidation with CIE. However, the letter dated Friday states, the transfer company sent the forms without the consent of either Central Iowa or REG.

"We hereby advise you to ignore the forms and discard the letter," Central Iowa plant manager Derek Winkel wrote in a letter filed with the Securities and Exchange Commission on Monday. "This information will be requested at the appropriate time at a later date. We apologize for the confusion that this premature mailing may have created."

Winkel goes on to note that the consolidation of Central Iowa with REG is still progressing, "albeit at a slower pace (than) was originally thought."

The SEC still needs to approve the registration statement and joint proxy statement for the proposed consolidation, Winkel said. Once approved, an informational meeting will be scheduled with Central Iowa unit holders and a special member meeting will be set to consider and vote on the proposed consolidation transaction.

Since Central Iowa Energy's start in April 2007, the company has generated net losses of $14.3 million.

Elevance gets Power Fund grant for project at Newton biodiesel plant

Newton Independent

The Iowa Power Fund recently approved a $3.8 million grant that will aid Elevance Renewable Sciences in adding technology to the Newton, Iowa biodiesel plant to turn feedstock oils and animal fats into specialty chemicals and jet fuels.

The state grant is in addition to a $2.5 million U.S. Department of Energy grant previously announced for development of the pilot project at the Newton plant.

Working in conjunction with Renewable Energy Group, the firm in the process of an asset purchase of Central Iowa Energy, the biorefinery will convert renewable raw materials largely sourced from Iowa into petroleum replacement fuels for use in such products as cosmetics, candles, solvents, adhesives, disinfectants and high performance motor fuels.

The Newton Independent previously wrote about the U.S. Department of Energy grant here.

A post on Elevance's blog gives more information on its plans for the use of various feedstocks.   

Elevance's plan for Newton biodiesel plant further explained

Newton Independent

This news report gives further detail on Elevance Renewable Science's plan to build a test facility on to the Jasper County biodiesel plant currently in the process of being taken over by REG. The Illinois company, which recently received a $2.5 million federal grant and is seeking state of Iowa financial assistance, plans to turn chicken fat into jet fuel. You can read it here.

The Iowa Economic Development Board is being asked at its meeting later this week to assign its agreements with Central Iowa Energy to REG to allow the asset purchase of the biodiesel plant to move forward.

County supervisors assured biodiesel plant will pay back taxes

By PETER HUSSMANN

The Jasper County Board of Supervisors today said they have been assured by representatives of Central Iowa Energy, the beleaguered biodiesel plant in the process of being acquired in by Renewable Energy Group, that the company will pay nearly $130,000 it owes in back property taxes once the asset purchase agreement is complete.

The issue arose today as the board voted to approve a resolution that authorizes the execution of an assignment and assumption agreement by and between Central Iowa Energy and REG Newton that continues the provisions provided in the redevelopment agreement entered into as the facility was being constructed in late 2006.

Under the terms of the agreement entered into in November 2006, Central Iowa Energy agreed to build a 30 million gallon a year biodiesel plant with a total investment of $38 million in return for the county's cost of constructing $745,000 in sewer improvements to the site. REG Newton, the new company acquiring the assets of Central Iowa, agrees to abide by the terms of the agreement, including a minimum assessment agreement used to pay the cost of the sewer improvements.

In an end-of-year fiscal year report filed with the federal Securities and Exchange Commission in late November, the company reported that as of the middle of November, the company had yet to pay approximately $123,000 in property taxes due at the end of September. With interest, the outstanding tax bill now stands at $129,288.

The supervisors said today that they have received assurances the outstanding tax bill will be paid. The supervisors said money generated from the closure of the transaction with REG Newton will be used to pay the outstanding debt. The payment is expected before the end of the year, the supervisors said.

The county also agreed to a subordinating its financial interest under the terms of the redevelopment agreement to AgStar Financial Services, the lending institution that purchased the interests of Central Iowa Energy's former lender, F&M Bank.

Central Iowa Energy has generated net losses of $14.3 million since beginning operations in April 2007. For the fiscal year ended in September 2009, the company reported year-long losses of $7.9 million.

REG to assume biodiesel plant's redevelopment agreement with Jasper County

By PETER HUSSMANN

Renewable Energy Group's acquisition of the Jasper County biodiesel plant is expected to take another step toward completion today when the Jasper County Board of Supervisors acts on an assignment and assumption agreement between the two companies and the county and agrees to a subordinate financial position with plant's new lender.

REG Newton, a limited liability company set up with plans of acquiring virtually all of the assets of Central Iowa Energy's Jasper County biodiesel plant, has agreed to have assigned and assume the redevelopment agreement and minimum assessment agreement the county entered into with CIE in November 2006 for construction of the plant.

Under the terms of the agreement, Central Iowa Energy agreed to build a 30 million gallon a year biodiesel plant with a total investment of $38 million in return for the county's cost of constructing $745,000 in sewer improvements to the site.

Jasper County is also waiving a past issue of noncompliance by Central Iowa with the terms of the agreement for failing to timely file an annual report with the county. A November SEC report filed by Central Iowa Energy also noted that it was out of compliance with the terms of the agreements for failing to make its $123,700 property tax installment payment. Offices at the Jasper County Courthouse were not open at this hour to determine if that default had been cured. (Additional information: Jasper County Treasurer Doug Bishop said the tax payment remains outstanding and now sits at $129,288 including interest. He plans to provide county supervisors a memo today noting the outstanding tax debt.)

The county is also expected to agree to a subordinating its financial interest under the terms of the redevelopment agreement to AgStar Financial Services, the lending institution that purchased the interests of Central Iowa Energy's former lender, F&M Bank.

Since the Jasper County biodiesel plant's start in April 2007, the company has generated net losses of $14.3 million. For the fiscal year ended Sept. 30, losses amounted to $7.9 million. The plant produced just five million gallons of biodiesel last fiscal year, 17 percent of its capacity.

Newton biodiesel plant's total losses now top $14 million

By PETER HUSSMANN

Jasper County's financially reeling biodiesel plant lost more millions of dollars than gallons of renewable fuel produced last fiscal year, documents filed with the Securities and Exchange Commission after the close of business Monday indicate.

Central Iowa Energy filed its year-end financial statement that showed the company incurred a net loss of $7.9 million for the year ended Sept. 30. For the fiscal year, the Newton plant produced just over 5 million gallons of biodiesel or just 17 percent of its 30 million gallon yearly production capacity.

Since the facility's start in April 2007, the company has generated net losses of $14.3 million.

The federal filing shows the company is out of compliance with nearly all terms of its financing agreements with its lender, Ag Star Financial Services (which purchased the interests of its former lender F&M Bank), has received notice of default on loans from the Iowa Department of Economic Development for falling short of its job creation requirements, is being required by the Iowa Department of Revenue to repay nearly $76,000 in sales tax refunds, could be on the hook to repay Jasper County approximately $745,000 for construction of sewer improvements to the plant and did not pay its most recent property tax installment of approximately $124,000.

Monday's SEC filing also made note of Central Iowa's entry last week into a second amended and restated Asset Purchase Agreement between the county biodiesel plant and Renewable Energy Group. The agreement, which extends the termination date for the transaction to be complete until Feb. 28, 2010, calls for REG to assume virtually all of the assets of Central Iowa in exchange for shares of a new company to be formed by REG. Shares of the new company will be distributed to Central Iowa unit holders in correlation to their holdings, though some shares may be held back as deemed necessary to satisfy claims against or liabilities of the company.

The SEC filings on the company's year-end results can be found here.

REG assumes assets of Illinois biodiesel plant

Newton Independent

A subsidiary of Renewable Energy Group, the Ames-based firm looking to acquire the assets of the Central Iowa Energy biodiesel plant in Newton, has acquiredthe Nova Biofuels Seneca biodiesel plant in Seneca, Ill., Biodiesel Magazine is reporting today.

According to the online news report, REG also purchased Nova Biosource Technologies in the asset purchase agreement. The Seneca biodiesel plant is a 60-million-gallon-a-year facility.

A Securities and Exchange Commission filing made in connection with the sale states that REG agreed to "acquire substantially all of the Seneca sellers' assets, excluding certain specified assets, used in manufacturing ... biodiesel and related co-products out of its production facilities in Seneca, Ill., including all patents and intellectual property rights to Nova's process technology, and to assume a bank term debt of approximately $36,250,000."

The magazine reports REG had no comment on the purchase.

Earlier this year, REG announced plans to assume the assets of Central Iowa Energy in Newton, as well as the assets of biodiesel plants in Wall Lake, Iowa and Danville, Ill.

The Biodiesel Magazine article may be read here.

CIE tells shareholders of past business arrangement between some board members and REG

By PETER HUSSMANN

Central Iowa Energy company notified its shareholders through a Securities and Exchange Commission filing on Thursday about a past independent business arrangement several of its current and past board members had with the company now in the process of acquiring the Newton biodiesel company's assets.

The company first made note of the situation in its latest quarterly report filed in August saying the information just became known to Central Iowa during the period ending June 30, 2009. Thursday's filing amends its September 2008 quarterly report to "provide additional information regarding transactions with related persons."

The SEC filing indicates that The Biodiesel Group (TBG) is an entity currently owned by Warren Bush, Denny Mauser and William Horan, all current board members of Central Iowa Energy. In addition, Tom Schroeder was an owner of TBG through 2007 and sat on the Newton biodiesel company's board of directors until April 2008.

The SEC amendment notes that not only did Central Iowa contract with TBG for services, but that TBG had a contract with Renewable Energy Group, Central Iowa's operational management firm and now potential asset purchaser, for development services in connection with the construction of the Newton plant.

"In addition to its principals serving on our board of directors, we contracted with TBG for consulting services, including assistance with negotiation of various contracts, assistance in the planning of our equity marketing effort, and assistance in securing debt financing services," Thursday's filing states.

"Certain principals of TBG informed us that Renewable Energy Group (REG) and TBG had an agreement pursuant to which TBG received a total of $450,000 from REG for development services and expenses incurred in connection with the development of our plant and several other biodiesel projects. The $450,000 was paid by REG to TBG in multiple installments made from Dec. 6, 2005 through Oct. 12, 2007. It is our understanding that the Oct. 12, 2007 payment was the last payment."

The filing goes on to spell out other contractual arrangements Central Iowa Energy had with REG, including its management and operational services agreement and design build contract. Central Iowa eventually agreed to provide REG with 1,000 of its membership units as payment for the last $1 million of its design-build services on the construction of the $39.3 million facility.

"The payments received by TBG from REG may have given Messrs. Bush, Schroeder, Mauser and Horan an interest in transactions between REG and the company," Central Iowa wrote in its filing.

The filing also makes note that Mr. Bush's position on Central Iowa's audit committee does not qualify him as an independent member as required by the company's charter.

"Warren Bush is not independent under our Audit Committee charter because he previously received approximately $65,000 in compensation and membership unit awards under our consulting agreement with The Biodiesel Group, of which he is an owner, and an additional $20,000 for legal services previously rendered to the company," the filing states, acknowledging that the other two members of the committee are independent as defined.

In its August notation of the recently discovered business arrangement, Central Iowa wrote in its quarterly report to shareholders that "had we been informed by TBG and its principals of the agreement between REG and TBG at the time it was made, the agreement may have been disclosued in our previous reports."

The complete SEC filing can be read here.

Iowa Interstate Railroad testing biodiesel made in Newton in engine fleet

Newton Independent

Iowa Interstate Railroad has begun testing the use of biodiesel blends for possible future use in its locomotives, Progressive Railroading reported today.

The magazine said is working with the Newton-based Central Iowa Energy plant, which is soon to be consolidated with Renewable Energy Group, to test the blended fuel in one locomotive at its Council Bluffs rail yard.

The tests, the magazine reported, are designed to measure the wear and tear on movable engine parts, horsepower ratings and emissions. A variety of blends are being tested to determine the best mixture containing various vegetable oils and fatty acids.

"This could open the door for over 600 other railroads to have another source of fuel to use in their locomotives that burns cleaner and is environmentally friendly," Iowa Interstate President and CEO Dennis Miller is quoted as saying in the article.

CIE reports loss for quarter, explains asset purchase plan

By PETER HUSSMANN

Central Iowa Energy's money woes continued in the last quarter with the Jasper County-based manufacturer of biodiesel recording a net loss of $1.4 million for the three-month period ending June 30.

CIE's operating results were filed with the Securities Exchange Commission after the close of the trading day on Wednesday.

In its report, CIE notes that it has never been a profitable concern. Since its inception in 2007, the company has now accumulated losses topping $12.8 million.

The company's lack of working capital has severely reduced its ability to produce biodiesel. For the quarter, the facility operated solely under a toll processing agreement with a subsidiary of REG, the company CIE has entered into an asset purchase arrangement. Production for the quarter amounted to only 16 percent of its nameplate capacity of 30 million gallons of biodiesel a year.

"We do not expect to have sufficient working capital on hand in the foreseeable future to acquire feedstock to produce biodiesel other than pursuant to a toll processing arrangement, which generally shifts the risk of feedstock costs and biodiesel prices to the other party," the report states. "It is also uncertain whether we will maintain sufficient funds to cover the non-feedstock costs of production associated with biodiesel production under toll processing arrangements."

As the quarterly report was being filed, shareholders of Central Iowa Energy were meeting in Newton for the company's annual meeting. Following the business meeting to select officers, CIE CEO John Van Zee addressed shareholders on the reasons behind the board of director's decision to seek a consolidation arrangement with Renewable Energy Group.

Van Zee said the board has been working since the first half of 2008 to find solutions to its working capital problems, according to an SEC filing of his statement to the unitholders. However, due to the global financial crisis that was unfolding at the time, CIE found that "none of these equity or debt options were found to be viable."

Later in the year, the board hiredconsultants to assist it "identifying and interesting parties in  providing funding or financing for CIE's business by means of any debt, equity or business combination including, but not limited to, joint venture, merger, acquisition or recapitalization," the SEC filing states. "After reviewing many opportunities through these venues, the board concluded that it believed the best option to ensure the preservation and growth of unitholder value was to consolidate with REG."

In urging shareholders to support the plan, through a vote to be held at a future date, Van Zee noted many "factors" that lead the board to seek the asset purchase arrangement with REG. Among others, he noted:

"We are in default with our loan agreements and our lender could elect to accelerate our indebtedness or foreclose on its mortgage and security interests in all of our assets.

"We do not have adequate working capital to purchase feedstock or fund ongoing operations.

"If the consolidation is consummated, CIE members will own shares in a larger, more diversified company that may be better positioned than CIE to become listed on a stock exchange or obtain other means of liquidity."

REG management officials were also on hand to speak at Wednesday's shareholder meeting.

A full copy of Mr. Van Zee's remarks can be read here.

CIE enters into amended asset purchase agreement with REG

By PETER HUSSMANN

Shareholders attending tonight's annual meeting of Central Iowa Energy, the Newton-based biodiesel plant, are expected to hear details of the amended asset purchase agreement the company entered into with Renewable Energy Group earlier this month.

In a filing with the Securities and Exchange Commission last week, Central Iowa notes that the new agreement supersedes the original May 8 document that calls for the consolidation of the Newton-based limited liability company under a new company headed by REG.

According to the filing, the new agreement modifies certain terms of the original agreement including:

• removing the requirement that unit holder approval of Central Iowa's dissolution and liquidation be obtained prior to closing the transaction.

• extending the period during which Central Iowa must dissolve and liquidate, clarifying some ongoing costs of Central Iowa that will be paid by REG for a period of up to six months following the close of the transaction, and clarifying matters related to CIE's anticipated liquidation and the satisfaction of creditors.

• increasing the number of shares of the new company to be issued to CIE by an amount corresponding to REG's ownership in the company and permitting REG to participate as a unit holder in the company's distribution of shares.

The filing also indicates that REG Newco has filed a registration statement containing a preliminary joint proxy statement/prospectus on the new company to be formed and that additional filings will be forthcoming.

CIE notifies SEC of late filing

By PETER HUSSMANN

Officials with Central Iowa Energy, the Jasper County biodiesel plant proposed for consolidation under the umbrella of the Renewable Energy Group, told the Securities and Exchange Commission on Friday that its quarterly financial report would not be filed on time.

In a notification of late filing to the SEC, company officials said its financial results report would be late because the "Registrant is considering additional disclosures."

"The Quarterly Report on Form 10-Q will be filed no later than the fifth calendar day following the prescribed due date," Central Iowa officials stated in Friday's SEC filing.

The report covers the period ending June 30, 2009. The reports are due 45 days following the end of the quarter.

On Wednesday, beginning at 6 p.m. at the DMACC Sodhexo Conference Center, shareholders will gather for the company's annual meeting. At the end of the meeting, representatives of REG will be on hand to answer questions on the proposed consolidation.

The agreement provides for the sale of all of Central Iowa Energy's assets to Renewable Energy Group, currently the Newton biodiesel plant's management firm, in exchange for shares of stock in the new consolidated company. In addition, "certain liabilities" of Central Iowa Energy will be assumed by the new holding company.

Completion of the agreement, which also contemplates the consolidation of a Danville, Ill., and Wall Lake, Iowa biodiesel operations, is expected to be completed by late summer or early fall, according to information previously provided to investors. The asset purchase agreement is subject to shareholder and regulatory approval, as well as "numerous other conditions," including the assent of Central Iowa Energy's senior lender, F&M Bank.

In its two years of operations, Central Iowa Energy has recorded losses in excess of $11 million. It's latest quarterly report indicated that biodiesel production at the Newton plant had dwindled to 5 percent of its 30-million-gallon yearly nameplate capacity due to cash flow and liquidity problems.

CIE consolidation proposal to be discussed with shareholders

By PETER HUSSMANN

Shareholders of the financially-troubled Jasper County, Iowa-based biodiesel plant are being invited to attend an informational meeting on the proposed consolidation of the company with Renewable Energy Group.

In a letter authored by Jim Johnston, chairman of Central Iowa Energy, shareholders are being asked to attend a session immediately following the Aug. 19 annual meeting at the DMACC Sodhexo Conference Center in Newton to hear details of the consolidation transaction with REG. The informational meeting is scheduled to start at approximately 7 p.m., an hour after the start of the annual meeting.

"Key staff from REG will be on hand to give a presentation," Johnston wrote to shareholders. "There will be time allotted after the presentation for questions from the floor."

The agreement provides for the sale of all of Central Iowa Energy's assets to Renewable Energy Group, currently the Newton biodiesel plant's management firm, in exchange for shares of stock in the new consolidated company. In addition, "certain liabilities" of Central Iowa Energy will be assumed by the new holding company.

Completion of the agreement, which also contemplates the consolidation of a Danville, Ill., and Wall Lake, Iowa biodiesel operations, is expected to be completed by late summer or early fall, according to information provided to investors. The asset purchase agreement is subject to shareholder and regulatory approval, as well as "numerous other conditions," including the assent of Central Iowa Energy's senior lender, F&M Bank.

In a previous correspondence with shareholders, Johnston said plans to consolidate the operations of each of the four companies under a common ownership structure "is the best option for CIE in the current challenging environment."

"We look forward to continuing our relationship with REG as we consolidate under a common ownership structure," Johnston wrote. "As you may know, REG is an Iowa company headquartered in Ames with more than a decade of biodiesel production. REG has stated that it looks forward to continuing the vision of our facility to spur rural economic development and support the local economy by being good business partners and neighbors."

In its two years of operations, Central Iowa Energy has recorded losses in excess of $11 million. It's latest quarterly report indicated that biodiesel production at the Newton plant had dwindled to 5 percent of its 30-million-gallon yearly nameplate capacity due to cash flow and liquidity problems.

"We look forward to continuing our relationship with REG as we consolidate under a common ownership structure," Johnston wrote. "As you may know, REG is an Iowa company headquartered in Ames with more than a decade of biodiesel production. REG has stated that it looks forward to continuing the vision of our facility to spur rural economic development and support the local economy by being good business partners and neighbors."

In its two years of operations, Central Iowa Energy has recorded losses in excess of $11 million. It's latest quarterly report indicated that biodiesel production at the Newton plant had dwindled to 5 percent of its 30-million-gallon yearly nameplate capacity due to cash flow and liquidity problems.