Earth Biofuels restructures debt

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Web exclusive posted July 23, 2008 at 9:45 a.m. CST

Earth Biofuels Inc., a producer, distributor and marketer of biodiesel, has announced a restructuring of debt in order to lessen the monetary load at its Durant, Okla., biodiesel production facility. By transferring debt to another facility, the company has reduced the secured debt on the Durant plant by $4 million.

Earth Biofuels is most famously known for its BioWillie brand of biodiesel, promoted fervently by country singer/activist/company shareholder Willie Nelson.

Last year, the company underwent a hearing to prevent its involuntary bankruptcy after a petition was filed by a group of shareholders, according to Earth Biofuels Corporate Communications Director Shawne Horn. In early July, the company announced its subsidiary, Earth LNG, would become its own publicly traded company. Horn said Earth Biofuels retains a 70 percent ownership of the liquefied natural gas company.

As a result of the spin-off, Earth Biofuels was able to transfer $4 million of debt owed on the Durant facility to the $34 million promissory note held on the liquefied natural gas facility in Topock, Ariz.

According to Horn, the monetary shuffle was made in order to help the company refocus its efforts on biodiesel production. "We are trying to realign our focus and get back into biodiesel production and distribution with an eye toward cellulosic ethanol technology," she said. The company is pursuing an engineering upgrade for its Durant facility to allow for the pre-treatment of high free fatty acid feedstocks. The company is also planning to increase production at the facility to 20 MMgy.

Horn acknowledges the recent difficulties experienced by Earth Biofuels and likens it to problems experienced by biodiesel companies throughout the industry. "We are just so thankful that because we've maintained enough diversity the company is still alive and now we can really throw our weight behind biodiesel," she said.