Panda Ethanol Restructures Funding Arrangements for Hereford, Texas Facility
DALLAS, Oct. 13 /PRNewswire-FirstCall/ — Panda Ethanol Inc. today announced that it has successfully restructured the funding arrangements on the company’s 115-million gallon-per-year, biomass-fueled ethanol refinery, located in Hereford, Texas. The restructuring was made with the support of the project’s senior and subordinated lenders and will allow for the completion of construction and startup of the facility.
As a part of the restructuring, the Hereford project’s senior lenders waived all existing defaults occurring under the original financing agreements allowing the project to make construction-related borrowings of up to $31.5 million. The project can also draw upon $2.5 million in new proceeds received from the Hereford subsidiary’s subordinated lender. Panda Ethanol, the parent company of the Hereford project, will also receive $2.5 million in working capital as the result of a new equity investment from Panda Energy International, Panda Ethanol’s founder and single largest shareholder.
In addition, the company also announced that it has retired a loan from Panda Energy in the amount of $1,628,868 of principal and interest owed. The debt from the loan was converted to common stock in Panda Ethanol at the price of 25 cents per share. Retiring the loan reduces the debt liability of Panda Ethanol as well as the company’s exposure to interest rate risk as the loan was tied to the London interbank offered rate, or LIBOR, which has significantly increased in recent weeks.
“The successful restructuring of the Hereford project’s funding arrangements represents a vote of confidence in our ability to manage the remaining construction at the Hereford facility,” said Darol Lindloff, chief executive officer of Panda Ethanol. “Today, there are a large number of subcontractors and a very talented and well-trained team of employees at the site who are working to complete construction and ready the Hereford refinery for startup. We continue to believe that, once completed, the Hereford refinery will be one of the most cost-efficient ethanol production facilities in the United States.”
Panda Ethanol expects to complete construction of the Hereford refinery by January 30, 2009. The company has disclosed that it may need to obtain additional working capital for the future operation of the facility depending on future market conditions and commodity pricing.
About Panda’s Hereford, Texas Ethanol Refinery
When completed, Panda Ethanol’s 115-million gallon-per-year ethanol refinery, located in Hereford, Texas, will be the largest biomass-fueled ethanol plant in the United States with one of the lowest carbon footprints of any similar-sized ethanol facility in the nation.
The plant has been designed to annually refine an estimated 38 million bushels of feedstock-grade corn into a clean burning, renewable fuel for the nation’s transportation needs. The biofuel produced by the Hereford plant could displace approximately 2.6 million barrels of foreign oil a year.
Unlike other plants which burn expensive natural gas or coal to generate the steam used in the ethanol manufacturing process, the Hereford facility will gasify up to 1 billion pounds of cattle manure per year. By using biogas to fuel the plant, Panda will both conserve the energy equivalent of 1,000 barrels of oil a day and help to address a significant environmental problem for the Panhandle region.
Hereford, which bills itself as the “Beef Capital of the World,” boasts 3.5 million head of cattle within a 100-mile radius. Panda officials have dubbed it the “Saudi Arabia of cattle manure” as each animal produces approximately two thousand pounds of organic waste a year. As the waste material decomposes, it emits methane – a potent greenhouse gas that many believe contributes to global warming. Panda’s Hereford facility will dispose of the waste product by utilizing a bubbling fluidized-bed gasifier. The gasifier will thermally decompose the organic material in a closed, multi-phase process. The result is a clean, odor-free conversion of the material into the steam necessary to process corn into ethanol.
About Panda Ethanol
Panda Ethanol Inc. (BULLETIN BOARD: PDAE) , headquartered in Dallas, Texas, is working to reduce the nation’s dependence on hydrocarbons and foreign oil by producing clean, economic alternative energy. In 2005, Newsweek magazine named Panda one of the 10 most eco-friendly companies in America. In 2007, Project Finance Magazine awarded Panda “North American Ethanol Deal of the Year” for its financing of the state-of-the-art, Hereford biomass-fueled ethanol facility.
The company is committed to being the “greenest” ethanol producer in the United States. Additional information on Panda Ethanol can be found at http://www.pandaethanol.com/.
Safe-Harbor Statement — Except for the historical information contained herein, the matters set forth in this news release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Panda Ethanol intends that all such statements be subject to the “safe-harbor” provisions of those Acts. Many important risks, factors and conditions may cause Panda Ethanol’s actual results to differ materially from those discussed in any such forward-looking statement. These risks, factors, and conditions include, but are not limited to, our ability to mobilize the Hereford facility workforce, the time, cost and ability to complete construction of the Hereford facility; our ability to draw additional funds under the Hereford senior credit facility; issues and/or delay arising in connection with the development and construction of the Hereford facility; permits, easements, site conditions, workmanship, process engineering, and conflicts of interest as well as the risks and uncertainties set forth in Panda Ethanol’s Quarterly Reports on Form 10-Q filed on August 19, 2008 and May 20, 2008 and our Annual Report on Form 10-K filed on April 15, 2008 and its annual and quarterly reports filed with the Securities and Exchange Commission. In addition, new factors, risks and uncertainties may emerge from time to time. Panda Ethanol undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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Panda Ethanol Inc.
CONTACT: media or investors, Bill Pentak of Panda Ethanol Inc.,+1-972-361-1200, email@example.com
Web site: http://www.pandaethanol.com/