Agri Energy Limited is to sell all of its interests in the United States, through the sale of 100% of the issued shares of wholly owned United States company, US Canadian Biofuels Inc. for $42.5 million. The announcement, made today (7th January), follows a two week voluntary suspension of trading in the company's shares while negotiations for the sale of USCB were completed.

The assets of USCB include:100% of the issued shares of Beatrice Biodiesel LLC, the limited liability company which owns the Beatrice Biodiesel Project and 100% of the issued shares of Beatrice Ethanol LLC, the limited liability company which owns the proposed Beatrice Ethanol development project; plus land and buildings located at Beatrice, Nebraska. The sale will be to a special purpose company, Beatrice Biodiesel Acquisition company LLC ("BBAC"), established by a consortium of US investors including part of the Group's United States management and Pangaea Technology Finance LLC ("Pangaea").

Commenting on recent events the AAE Chairman and Chief Executive Officer, Mr Peter Anderton said, "The restructure of the group's activities and sale of the US operations was considered by the Board of AAE as the best corporate option for the company and shareholders".

"Investment support for company has been adversely affected by the poor performance of the biofuels industry in the Australian market, high feedstock costs world wide and delays to completion of the project. The Board considers the sale of the Group's main asset removes a requirement to raise significant additional funds to support the project and provides cash for further development opportunities which have the potential for greater leverage to shareholders. In addition the sale allows AAE to reduce debt and create a stable platform for its ongoing operation. While the company maintains a positive perspective on the long term opportunity in the biofuels sector, the structure and focus of these developments need to be reassessed in light of the substantially changed domestic and global landscape".

A Letter of Intent covering the deal outlines the following detail:

# Payment of an initial deposit to AAE of $1 million. The first instalment of $250,000 was received by AAE on 7 January 2008 with the remainder on signing a formal memorandum of understanding (expected to be completed within the next 7 - 14 days).

# BBAC arranging a bridge loan to USCB of $5 million to fund a $2 million loan repayment to AAE and a further $3 million to cover cost overrun due to project delays of the Beatrice Biodiesel Project.

# A cash payment to AAE of $22.5 million less deposit amount and funds drawn under the bridge loan at financial close scheduled for February/March 2008.

# An earn out over a five year period of $20 million based on an EBITDA formula, with a minimum payment to AAE of $15 million by the end of the 5th year.

# BBAC arranging through Pangaea a debt facility of not less than $35 million (subject to current agreements with AgStar Financial Services the senior lender to the Beatrice Biodiesel Project and Oppenheimer & Co Inc.)

# BBAC arranging a working capital facility for the Beatrice Biodiesel Project of $10 million.

# AAE maintaining representation on the Board of USCB during the earn out period.

# The sale of USCB is subject to documentation of a Sale and Purchase Agreement which is expected in the next month and is subject to approval by AAE shareholders in accordance with ASX Listing Rules.