NEDAK restructures capital, brings in $10 million in equity

By Holly Jessen | January 31, 2012

A 44 MMgy ethanol plant in Atkinson, Neb., that was having financial difficulties now has a stronger balance sheet. NEDAK Ethanol LLC recently completed a capital restructuring deal, raised $10 million in equity and entered into an asset management agreement. “It’s a solution for future success with less debt and more equity,” said Sue Wyka, partner with Ascendant Financial Partners LLC, which acted as the ethanol plant’s financial advisor on the transaction.  

The capital restructuring reduces the company’s debt burden, amending its senior loan facility with AgCountry Farm Credit Services, FLCA (AgCountry) and its tax incremental financing loan with Arbor Bank of Omaha, Ascendant Financial Partners said. New and existing investors also raised $10 million in equity capital, with more than half coming from existing members and local producers. Finally, the company entered into a seven-year asset management agreement with Tenaska BioFuels LLC. “We believe that the addition of Tenaska BioFuels and the restructuring of the credit facilities is a positive step in the improving quality of our loan and the future of NEDAK,” said Mark Jepson, executive vice president and chief credit officer at Arbor Bank.

Tenaska BioFuels has been working with NEDAK as its ethanol marketer since October 2010. Under the new agreement, the company will also purchase the ethanol plant’s corn and natural gas as well as marketing its ethanol and distillers grains to local and international markets. “This [asset management agreement] is a positive step in the right direction for NEDAK,” said Jerome Fagerland, NEDAK general manager. “The company has been through challenging times, along with the rest of the ethanol industry, since the second quarter of 2010. We are looking forward to working with Tenaska BioFuels, which has the financial wherewithal to manage through volatile commodity markets and assist us in maintaining a balanced physical or financial grind margin. The agreement will enable us to take advantage of favorable forward grind margins as the market allows them, which will help NEDAK to improve its financial liquidity and reduce debt.”

Tenaska BioFuels also expressed excitement about the deal, adding that NEDAK’s management team has done a good job of increasing yields and cost effectiveness at the ethanol facility. “[This agreement] will assist NEDAK in maintaining a balanced physical or financial position on both feedstocks and finished products with a goal of improving NEDAK’s financial liquidity and production margin,” said Dave Neubauer, vice president and general manager of Tenaska BioFuels.

NEDAK was formed as a development company in December 2003. Its first corn grind was on Dec. 27, 2008.