Heron Lake [* * *] COES?

First a Letter to Heron Lake BioEnergy (HLBE) members

"Our restructure also has brought the opportunity to be able to install corn oil extraction in the plant in the near future. Corn oil extraction provides another revenue stream to the company, and will provide the plant with additional options to potentially increase our production by reduction of drying the removed oil thru our steam tube dryers which today are running at capacity.


We hope to have the corn oil system installed and operational by February 1st. The outside concrete infrastructure and containment has been installed prior to the onset of frost and the corn oil tank has been delivered and installed in the containment. At the present time, HLBE is researching corn oil contracts with various end users." P. 1 Here Heron Lake BioFuel Energy (HLBE)
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Then we go to their restructure HERE - the first thing you notice is this:

"CERTAIN INFORMATION INDICATED BY [ * * * ] HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2."

Then in the same document in the section on Intellectual Property we find this:
"Borrower has entered into a [ * * * ] with [ * * * ] dated August 19, 2011, under which [ * * * ] will deliver [ * * * ] equipment to the Project and provide a Technology Service Program over a 3-year term, during which term Borrower will use the [ * * * ] equipment [ * * * ], and at the end of which term Borrower will have the right to buy the equipment. [ * * * ] is the owner or authorized user of any intellectual property rights embodied or represented in the [ * * * ] equipment, provided Borrower shall not acquire any right whatsoever to any such intellectual property rights, and provided further that [ * * * ] have asserted certain patent rights as to claimed [ * * * ] technology against various manufacturers and users of [ * * * ] technology including [ * * * ]. There may be one or more patents issued to or licensed by [ * * * ] in conjunction with the [ * * * ] equipment to be used at the Project."

Borrower makes no representation or warranty to Lender and gives no opinion to Lender on whether use of the [ * * * ] equipment infringes upon any rights of [ * * * ] or as to the outcome of the [ * * * ] or as to any rights or remedies [ * * * ] may assert against Borrower.  P. 58

And the price for the project? 

10. Borrower has entered into a [ * * * ] Agreement with [ * * * ] dated August 19, 2011, under which [ * * * ] will deliver [ * * * ] equipment and provide a Technology Service Program over a 3-year term, Borrower will pay a monthly fee of $52,000 per month over the 3-year term, and at the end of which term Borrower will have the right to buy the equipment for $1.00. p. 61

Note: If we do the math the total price is 1,872,001.  HERE shows a price of a non-GERS COES - 3 years ago at $2M.

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SkunK's Conclusion - [I want to hear your ideas in the comments!]
Heron Lake is going Corn Oil Extraction quickly and they are going to great length to hide the technology provider.  I really do not know if it is GreenShift or someone else - but I think it is someone else.  I thought it could be GreenShift, yet the price seems a bit low for a quality setup -  and this wording below kind of speaks against it - suggesting this setup might infringe GreenShift??: 
"Borrower makes no representation or warranty to Lender and gives no opinion to Lender on whether use of the [ * * * ] equipment infringes upon any rights of [ * * * ] or as to the outcome of the [ * * * ] or as to any rights or remedies [ * * * ] may assert against Borrower."

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Want more complexity? Mr. and Mrs. Fagen of Fagan construction seem to own about 43% of HERON LAKE BIOENERGY, LLC through Project Viking LLC.  Mr. Fagan is the President and CEO of Fagen, Inc.  GreenShift and Fagen appear to have a complicated business relationship where they work together on building COES and where they face each other in court over the Platinum Ethanol contract.  

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One more Layer??  ICM built the Heron Lake plant.
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Even Another Layer??  Heron Lake BioEnergy, LLC, Fagen, Inc and ICM, Inc. Enters Mutual Release and Settlement Agreement  HERE


SkunK

Heron Lake Sale

Lots of names that are familiar in this story . . .

The deal requires the approval of a majority of its unit holders, but a regulatory filing says it already has the approval of Heron Lake's largest stakeholder, Project Viking, a partnership owned by Ron Fagen, CEO of ethanol and renewable energy contractor Fagen Inc., and his spouse, Diane Fagen, who also is an executive with the Granite Falls, Minn., company. They control nearly 45 percent of the outstanding partnership units.

See Here

Heron Lake Blog Here

And more history here

SkunK

Heron Lake BioEnergy Update

"In February 2012, the Company completed installation of a corn oil separation system. The corn oil system will create a new revenue source for the Company."  See Here Page 13

SkunK

Note the key words "corn oil separation system".   Saying "separation" instead of extraction normally points to an ICM system.  Lots of layers here but Fagen owns a big chunk of Heron Lake and many **** agreements as laid out HERE.

Connection between Fagen and Platinum

Fagen Inc and Platinum Ethanol LLC have begun litigation against GreenShift for breach of contract?  and it was covered in this recent blog.  It appears to me that they installed a patented GreenShift COES without a signed contract and then when they went to get one after the fact, they had some trouble.  They decided to sue before getting sued - implying the COES contract was implied.  At least this scenario fits the facts I now have.  Here is the present schedule although I have not found the original complaint.

The most interesting thing I have found is the relationship between Fagen Inc and Platinum Ethanol.

Ron Fagen, is the majority owner of Platinum Ethanol.  Mr. and Mrs. Fagen serve on the Board of Directors of Platinum Ethanol.  Mr. Fagen’s is President and CEO of Fagen, Inc., and Mrs. Fagen’s present principal occupation is Director of Human Resources of Fagen, Inc.  Mr. Fagen and Mrs. Fagen are the only persons controlling Project Viking, LLC.  They and/or Project Viking LLC own or have owned significant interests in at least the the following Plants:
HERON LAKE BIOENERGY, LLC  
Granite Falls Energy, LLC
Golden Grain Energy, LLC
US BioEnergy Corporation
EAST KANSAS AGRI ENERGY LLC

Here is a picture of Platinum's Board of Directors.  Mr. and Mrs Fagen are circled in the back row.

Mr. Bowdish is the General Manager of Platinum Ethanol and is in the first row inside the circle. 
From June 2007 to November 2008, Mr. Bowdish was a member of the project development team at Fagen, Inc., Mr. Bowdish previously served on the Board of Platinum Ethanol, LLC in Arthur, IA, from October 2008 to December 2008, before he was appointed its General Manager. Since 2008, he has served as the General Manager of Platinum Ethanol, LLC where he is the sole manager of Platinum’s commodity margin and its risk management strategy.

Jennifer Johnson is standing to the right of Mr. Fagen.  This article lists a Jennifer Johnson as the CFO of Fagen Inc.

Matt Sederstrom is kneeling outside the circle, in the front row of the picture.  There is also a Matt Sederstrom serving as the V.P. Marketing and Project Development at Fagen, Inc.

Chad Core is not in the picture but is listed as a member of the Platinum Ethanol Board of Directors.  This article identifies Chad Core, "a long-time employee of Fagen Inc".  It appears he moved to Hungary to head up the new office for Fagen Inc and was not available for the picture.

Becky Dahl is listed as "Executive Assistant to the Board" and a Becky Dahl is also listed as Administrative Assistant at Fagen Inc HERE.

Dave Reinhart is standing to the far right, back row in the picture of Platinum Directors.  A Dave Reinhart is also listed as being a Fagen Inc. appointed Director at Corn, LP HERE

So what, SkunK???

So the Platinum Ethanol Board of Directors might as well meet in the Fagen company cafeteria.  Just thought you would find that interesting.

SkunK

These Ethanol Plants are listed as Fagen Projects