Cleburne plant restarts after convertible note issuance

Anyone looking for biodiesel in the Cleburne, Texas, area will once again have the opportunity to do so. After raising $2.5 million in working capital, EQM Technology & Energy was able to recently restart the 12 MMgy plant in Cleburne. The startup went smoothly, according to Jack Greber, CEO of EQM, adding that, “Production and sales have met our forecasts, and customer interest and demand have been strong.”

The restart of the plant would not have been possible without the company’s issuing of $2.5 million worth of convertible notes. The convertible notes allow the purchasers two different options. They can either wait the three-year time period the notes have been issued for and receive the payment back with an interest rate of 10 percent per annum. Or the purchaser can instead convert the notes into common stock in EQM at $0.40 share before the three-year time period. After one year, however, if EQM’s common stock has traded at an average price per share above two times the conversion price for 60 consecutive days, according to EQM, the company can “call,” or forcibly convert, the notes.

When EQM initially set-out to raise the working capital needed to restart the plant, the goal was to reach $3 million, but the company stopped at $2.5 million. Since the first issuance, however, the company has raised another $500,000 in convertible notes at the same rate of 10 percent, and time period for conversion of three years, helping the company to reach its initial goal of raising $3 million for working capital. “The capital raised from our private placement,” Greber also said about the most recent round of convertible notes issued, “ has been vital to these efforts” of restarting the plant.

During the first round of private placement, Robert Galvin, chief financial officer of EQM, told Biodiesel Magazine that many of the convertible note purchasers were people, “officers or directors,” already in the company. While the money raised from the issuance would all be used to restart the plant and buy product and chemicals, there has already been some talk of expanding the plant.