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| Imperial Petroleum signs biodiesel deal |
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| Written by Giles Clark, London | |
| Tuesday, 23 May 2006 | |
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Imperial Petroleum, Inc. (OTCBB:IPTM) announced that it has signed a Letter of Intent with Domestic Energy Partners of Spanish Fork, Utah to market biodiesel to petroleum refineries and other end users. Imperial's subsidiary, Hoosier Biodiesel Company, will sell up to 25 million gallons annually of biodiesel products manufactured by DEP using its proprietary process.
Under the terms of the Agreement, signed on 19 May, which is subject to completion of a Definitive Agreement, Hoosier Biodiesel Company will reserve a delivery commitment of up to 25 million gallons annually from DEP, with the right to increase its commitment to 100 million gallons annually, with the payment of $2.5 million in cash and 1.5 million shares of IPTM stock. DEP will carry a non-recourse note for the balance of the biodiesel commitment that is convertible into IPTM stock at a price of $3.60 per share after giving effect to proposed four-for-one reverse split of the stock. In addition, Hoosier Biodiesel Company will have the right to construct one or more plants using the DEP process in the Midwest, and biodiesel sold from those plants will offset any volume delivery commitments between the parties. The process developed by DEP is environmentally friendly, requires substantially less equipment and space than the traditional biodiesel manufacturing plants and is more cost effective. DEP is currently in production and has been using its own product for the last several years in its fleet of diesel cars. Hoosier Biodiesel Company expects its margins to be about $0.40 per gallon of product sold. The parties anticipate closing in July 2006 with first sales expected in October 2006. Jeffrey T. Wilson, President of Imperial said, "We're very excited about the DEP process and our new arrangement with them. We have, as part of our technical support staff, expertise in the refinery business, to assist our biodiesel business. Our location in the farm belt and access to river transportation will provide additional opportunities to construct biodiesel plants in this area that can provide product at competitive prices to the Gulf Coast refineries. Although biodiesel use is much more common in Europe than in the United States, with the recent increases in fuel costs and new fuel legislation, the use of biodiesel as an alternative fuel or as a fuel additive is expected to increase tremendously. The DEP process offers a lower cost alternative than many other processes currently employed by the industry. Since DEP is already in production, there are no lengthy construction delays before products are available." Share this article:        |
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