Cardinal Ethanol, LLC is an Indiana limited liability company formed on February
7, 2005 with the name of Indiana Ethanol, LLC. We were formed for the purpose
of raising capital to develop, construct, own and operate a 100 million gallon
per year ethanol plant in east central Indiana near Union City, Indiana. We
began producing ethanol, distillers grains and corn oil at the plant in November
2008. In August 2010, we obtained a new Title V air permit allowing us to increase
our annual ethanol production to 140 million gallons compared to 110 million
gallons under our previous permit. We have been operating at an annual rate
of approximately 120 million gallons for the fiscal year ended 2016. We anticipate
that our production will increase for the fiscal year ended September 30, 2017
due to the completion of certain projects to increase our production capacity.
On February 28, 2016, we executed a Sixth Amendment of First Amended and Restated
Construction Loan Agreement with First National Bank of Omaha ("FNBO")
(the "Sixth Amendment"). The Sixth Amendment extended the termination
date of the Revolving Credit Loan from February 28, 2016 to February 28, 2017.
On May 6, 2016, we executed a Seventh Amendment of First Amended and Restated
Construction Loan Agreement with FNBO (the "Seventh Amendment"). The
Seventh Amendment extended the draw period and conversion date of the Declining
Loan to July 31, 2016 and also amended the definition of permitted liens effective
March 1, 2016
On September 7, 2016, we executed an Eighth Amendment of First Amended and Restated
Construction Loan Agreement to be effective as of July 31, 2016, with FNBO (the
"Eighth Amendment"). In connection therewith, we also executed a Third
Amended and Restated Declining Revolving Credit Note (the "Declining Loan"),
a Term Note (the "Term Loan") and a Second Amendment of First Amended
and Restated Construction Loan Mortgage, Security Agreement, Assignment of Leases
and Rents and Fixture Financing Statement. The Eighth Amendment converts $15,000,000
of the principal balance on the Declining Loan, which was used for construction
advances, to amortizing term debt and reduces the availability of the Declining
Loan from $20,000,000 to $5,000,000 with such amount to be available for working
capital purposes. Pursuant to the Eighth Amendment, the interest rate on the
Term Loan is the 3-month LIBOR plus two hundred ninety basis points. The Eighth
Amendment provides for monthly installment payments of approximately $282,700
commencing on September 1, 2016, with a final maturity date of February 28,
2021.
We have recently completed projects to add storage capacity to our plant and
increase annual production capacity to approximately 135 million gallons. These
projects were substantially complete at September 30, 2016 for a total cost
of approximately $16,500,000. We continue to work to improve process efficiencies
and reduce bottlenecks and expect to reach our goal of operating at an annual
production rate of approximately 135 million gallons during the first quarter
of our fiscal year ending September 30, 2017.
On October 31, 2016, we purchased approximately 64 acres of land adjacent to
our property for a total purchase price of approximately $646,000.
The board of directors has approved capital projects for fiscal year 2017 to
add a fermenter, add an additional cooling tower cell and a beer-degasser. The
projects are expected to cost approximately $4,356,000. In connection with the
projects, the Company has executed contracts with Nelson Engineering, Inc. The
projects are expected to be complete by the end of the fiscal year ended September
30, 2017.
Subsequent to our fiscal year ended September 30, 2016, the board of directors
approved a project to add grain loading facilities and additional rail track
and grain storage. This project is expected to cost approximately $9,000,000.
Theses additions are intended to provide the flexibility to receive and ship
additional grain commodities if desired. We are currently in negotiations with
our primary lender regarding financing for the project.
Our primary product is ethanol. Ethanol is ethyl alcohol, a fuel component
made primarily from corn and various other grains. The ethanol we produce is
manufactured from corn. Although the ethanol industry continues to explore production
technologies employing various feedstocks, such as biomass, corn-based production
technologies remain the most practical and provide the lowest operating risks.
Corn produces large quantities of carbohydrates, which convert into glucose
more easily than most other kinds of biomass.
The principal co-product of the ethanol production process is distillers grains,
a high protein, high-energy animal feed supplement primarily marketed to the
dairy, beef, poultry and swine industries. Dry mill ethanol processing creates
three forms of distillers grains: Distillers Wet Grains with Solubles ("DWS"),
Distillers Modified Wet Grains with Solubles ("DMWS") and Distillers
Dried Grains with Solubles ("DDGS"). DWS is processed corn mash that
contains approximately 70% moisture. DWS has a shelf life of approximately three
days and can be sold only to farms within the immediate vicinity of an ethanol
plant. DMWS is DWS that has been dried to approximately 50% moisture. DMWS have
a slightly longer shelf life of approximately ten days and are often sold to
nearby markets. DDGS is DWS that has been dried to 10% to 12% moisture. DDGS
has an almost indefinite shelf life and may be sold and shipped to any market
regardless of its vicinity to an ethanol plant.
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