United States EnviroFuels, LLC
United States EnviroFuels, LLC
Company Overview
Building Environmentally-Friendly Ethanol Plants
Based On Sound Proven Science
To Provide an Economic Boost to The Local Economy
Prepared by the Members of U.S. EnviroFuels, LLC
July 12, 2005
1
United States EnviroFuels, LLC
Introduction
Entrepreneurial Start-Up
United States EnviroFuels, LLC is a new, innovative renewable fuel company dedicated
to providing Florida with the highest quality fuel ethanol finished products. We are an
entrepreneurial start-up company consisting of six members who have a vision to build a
fully-integrated fuel ethanol industry in the state of Florida. Yes, we are entrepreneurs
building a local ethanol company. But America’s fuel ethanol industry is built upon a
multitude of entrepreneurs who have successfully constructed, started and operated
ethanol production plants across the country. In fact, about half of today’s 85 ethanol
plants in the U.S. are owned and operated by corn farmer groups, true entrepreneurs, who
in virtually all cases had never built an ethanol plant previously. Several more ethanol
plants are owned by private, non-grower individuals, who also did not have prior
experienced building an ethanol plant. These Midwestern ethanol entrepreneurs have a
tremendous track record for success, in which nearly 100% of the ethanol plants have
remained in business in the past 10 years. By comparison, what U.S. EnviroFuels, LLC
brings to Florida is a complementary, diverse, cross-functional management team with
backgrounds from all walks of corporate America, and with competencies and
qualifications superior to the typical entrepreneurial corn farmer groups in the Mid-west
who own ethanol plants. We formed our company in 2003 because we believe we will
“do a better job” at building and successfully operating an ethanol plant than the average
ethanol plant owner.
More precisely, U.S. EnviroFuels, LLC is an ethanol technology intellectual property
company that is executing project development management, comprehensive permitting,
site plans with local stakeholders, total project financing, raw material sourcing, product
marketing, and construction for multiple fuel ethanol plants in Florida. U.S. EnviroFuels,
LLC is also the founder and managing member for each subsidiary fuel ethanol plant it
establishes. Through our due diligence efforts and detailed plant site selection process,
we have identified multiple, key, strategic locations which meet our company criteria for
locating fuel ethanol plants in Florida.
Company Vision
Through our dedicated project management for building ethanol plants, as well as our
ethanol plant operational management, U.S. EnviroFuels, LLC will achieve our vision to
improve the environment, economy, and energy independence for Florida.
Our company vision is three-fold:
1. Build environmentally-friendly, "clean, green" ethanol plants which comply
with all state and local emissions requirements in Florida.
• Our ethanol plants will operate with air emission unit control equipment
that satisfies State of Florida FAC Rule 62-210.400(6) Best Available
Control Technology (“BACT”) requirements.
2
United States EnviroFuels, LLC
•
Our ethanol plant air emissions will be below the allowable State of
Florida thresholds for a minor source of air emissions, and therefore, will
comply with the National Ambient Air Quality Standards.
• We will design and locate ethanol plants to have minimal to zero impact
on local potable water supplies.
• We will build ethanol plants which have zero process contact water
discharge to the local county sewer system.
• We will build ultra low odor ethanol plants with rigorous odor abatement
plans.
2. Help Florida reduce its heavy dependence on imported gasoline through a
Florida-based renewable fuel industry.
• We will capture the local gasoline market as the lowest cost ethanol
producer in Florida.
• Extend the local gasoline supplies and help reduce the cost of gasoline to
the consumer.
3. Enhance the Florida economy through utilization of a variety of local,
Florida “cellulosic biomass” feedstocks.
•
Like all other U.S. ethanol plants, our initial Florida ethanol plants will
use corn grain and sorghum grain as conventional feedstocks.
•
Currently, there are no ethanol plants in the U.S. which utilize plantderived, cellulosic-biomass waste streams for fuel ethanol production due
to very high capital costs, high production costs, and high investor risk.
Our corn-based ethanol production business will serve as a platform to
advance to cellulosic-biomass ethanol production in the future.
•
In the future, once capital costs and investor risks are both reduced for
cellulosic-biomass ethanol production facilities, U.S. EnviroFuels will be
well-positioned in the Florida ethanol industry to move to this next
platform. U.S. EnviroFuels plans to build one or more ethanol plants
which will utilize local Florida cellulosic-biomass feedstocks. Such
feedstocks may include citrus pulp waste, green tomato discards, fastgrowing energy tree crops, sugar cane bagasse, and urban yard and wood
waste.
In summary, our approach is quite simple: Build environmentally-friendly ethanol plants
based on sound proven science, thereby providing an economic boost to the local
economy, and reducing Florida’s dependence on imported gasoline.
Management
Management Team
U.S. EnviroFuels, LLC is comprised of a management team with diverse and highly
complementary expertise, qualifications, and experience in the ethanol industry,
investment strategy, commodity economics, international bulk commodity trading,
3
United States EnviroFuels, LLC
ethanol fermentation and processing technology, design and construction of grain
handling and storage facilities, mechanical engineering, waste-to-energy power plant
systems, and engineering of biological systems. The Management Team includes:
Bradley Krohn, Ph.D
Jeffrey Krohn, B.A.
Mike Kinley, M.B.A.
Steve Sukup, B.S.
Paul Hauck, P.E.
Tom Kendall, B.S.
In addition to owning an equity position, U.S. EnviroFuels, LLC will also hold a longterm operational management services agreement for each subsidiary fuel ethanol plant,
including Port Manatee EnviroFuels, LLC ethanol distillery. The goal of U.S.
EnviroFuels, LLC is to ensure ethanol plant quality control, optimize process efficiency,
maximize ethanol yields, and generate profits to ethanol plant shareholders. The current
members of U.S. EnviroFuels, LLC will act as directors in business management,
commodity sourcing, inventory management, commodity risk management, finished
product marketing, plant engineering, and production technology. U.S. EnviroFuels,
LLC also intends to directly employ senior management staff for each ethanol plant.
Figure 1 depicts the organizational work chart for the planned Port Manatee EnviroFuels,
LLC ethanol plant, in which the senior staff employed by U.S. EnviroFuels, LLC
includes the ethanol plant General Manager and the raw material Commodity Sourcing,
Inventory, and Shipping Manager (Mr. Tom Kendall).
Figure 1. Organizational Work Chart: U.S. EnviroFuels will execute ethanol plant
management for the planned Port Manatee EnviroFuels, LLC facility. The yellow boxes
are employed by U.S. EnviroFuels, LLC. Positions below the yellow boxes are
employed by the Port Manatee ethanol plant.
U.S. EnviroFuels, LLC: Managing Member
Paul Hauck
Environmental &
Mechan. Engineering
Bradley Krohn
Mike Kinley
Jeff Krohn
Technology &
Production
Business Operations
& Risk Management
Ethanol Markets
& Accounting
Tom Kendall
Commodity Sourcing,
Inventory & Shipping
Plant General Manager
Significant Ethanol
Plant Management Experience
Port Manatee EnviroFuels, LLC
• Lab Manager (1)
• Lab Technicians (3)
• Plant Manager (1)
• Administrative Manager (1)
• Operations Shift
• Certified Public Accountant (1)
Supervisors (3)
• Secretarial / Clerical (3)
• Plant Operators
(automated control station) (6)
• Maintenance Supervisor (1)
• Maintenance Labor Force (8)
• Material Handlers (6)
4
United States EnviroFuels, LLC
Executive Biographies
Bradley Krohn, Ph.D.
Managing Member and President
Recognizing his personal passion to become an ethanol producer, Dr. Krohn voluntarily
left his position at Monsanto in October of 2003 to become co-founder of U.S.
EnviroFuels, LLC with Michael Kinley. His company vision is to capitalize on an
untapped ethanol market potential for Florida and the southeastern U.S. using
conventional and alternative ethanol feedstocks in addition to corn. Dr. Krohn is an
expert in the areas of ethanol production technology, ethanol production quality control,
and biological engineering of ethanol production systems.
Prior to founding U.S. EnviroFuels, Dr. Krohn worked for Monsanto Company in St.
Louis, Missouri for 12 years in several advanced technology lead positions in the
development of agronomical-improved transgenic crops. While at Monsanto, Dr. Krohn's
expertise developed in the quality trait area of increased starch content and improved
starch quality in crops such as corn, wheat, and potato.
He managed various teams of scientists from R&D discovery to commercial product
development. As technical lead, Dr. Krohn interfaced and collaborated extensively with
commercial business leaders at Monsanto.
During his last three years, Dr. Krohn directed the technology platform for the Monsanto
BioEnergy Program. This initiative developed, characterized, and validated 'High
Fermentable Corn' (HFC) hybrids for the dry grind corn ethanol industry. HFC hybrids
give greater yields of ethanol per bushel of corn and have been successfully adopted by
33 dry grind ethanol plants. Dr. Krohn managed several large scale HFC hybrid
validation trials with seven different commercial ethanol plants, during which over two
million bushels of HFC hybrids validated that these 'ethanol hybrids' generate greater
yields of ethanol for commercial producers. In doing so, Dr. Krohn developed on-site
exposure to the operations of corn ethanol plants, the evaluation of ethanol plant
efficiencies, and the plant management of quality control and production yields.
Krohn received his B.A. in biochemistry from Williams College (Williamstown, MA),
and received his Ph.D in genetic engineering of industrial enzymes and industrial
fermentative microorganisms from the University of Florida (Gainesville, FL). He has
held a life-long passion for the commercial application of biotechnology and applied
microbiology in order to provide enhanced consumer benefits in an environmentallysound and friendly fashion. The production of fuel ethanol is a conduit for this passion,
as well as an avenue for Dr. Krohn’s personal belief and commitment that our country
needs to reduce its dependence on foreign oil.
5
United States EnviroFuels, LLC
Michael Kinley
Managing Member and CEO
Michael Kinley believes the United States can become less dependent upon foreign
sources of energy and has identified the ethanol industry as an emerging force. With this
in mind, he has worked with the major ethanol industry participants in both ethanol
technology development and new project development. As he and Dr. Krohn
independently investigated the opportunities within the industry, it became clear that their
opportunity was to develop and deliver on a vision of an environmentally friendly energy
company.
As they began working together, they quickly identified Florida as an excellent state to
start the company. It was clear to both of them that Florida has great energy needs
which can be addressed through the bio-economy. With this goal in mind they founded
U.S. EnviroFuels, LLC.
Prior to becoming the CEO of U.S. EnviroFuels, Mr. Kinley had an extensive career and
background in agriculture and science. He spent over a dozen years in business with
Monsanto, a leading Ag biotechnology and genetics company. He has held multiple
leadership positions with the company including Managing Director of Monsanto Canada
and Director of Business Development in North America.
In 2001, he founded GCM Holdings, which is a company that invests in and develops
technology platforms specifically for their potential to enable value-added agriculture and
environmental sustainability. GCM is involved in all aspects of venture development
ranging from the very earliest stages of entity development to the commercial launch.
GCM enables the success of early stage companies by developing economically sound
business models and by offering both strategic and executive leadership throughout the
early development phases. In many cases, GCM also takes an investment position in the
new venture.
Mr. Kinley graduated with distinction from Iowa State University in 1988 with a degree
in Agricultural Science, emphasizing in Chemistry. Mr. Kinley has also received his
Masters of Business Administration from Northwestern University's esteemed Kellogg
School of Management.
He is a native of Eastern Iowa where he was raised on the Kinley family farm. He has a
unique blend of skills, experiences and interests. He is entrepreneurial in his approach to
business and is lifelong student of investment strategy, economics and history. Mr.
Kinley has traveled the world extensively throughout his career, he as worked and lived
in both the United States and Canada.
6
United States EnviroFuels, LLC
Paul Hauck, P.E.
Managing Member and Secretary
Mr. Hauck will serve as director of environmental and mechanical engineering for the
management team of U.S. EnviroFuels, LLC. Through his personal life-long passion for
bioenergy and recycling waste streams into higher value products, Mr. Hauck joined U.S.
EnviroFuels to develop future biomass-to-ethanol commercial projects in Florida.
Mr. Hauck has over 30 years of experience in the field of engineering related to power
generation and public works, including municipal waste-to-energy plants, power plants,
and corn ethanol plants. Mr. Hauck has experience in process design and engineering of
dry grind corn ethanol plants.
Mr. Hauck received his B.S. in Mechanical Engineering from the University of
Pittsburgh. His expertise includes 13 years in solid waste-to-energy projects, along with
13 years experience as a Thermal Hydraulic Test Engineer at a steam plant for
Westinghouse Electric Corporation. As Construction Manager for Ogden Martin Systems
(currently known as Covanta Energy), Mr. Hauck supervised construction of a 1050 tonper-day Waste-to-Energy facility for Pasco County, Florida. Additionally, he had three
years in business development with Ogden Martin Systems in which he marketed wasteto-energy technology in the Southeastern United States, and assessed options for
beneficial reuse of non-ferrous metal and ash residue recovered from WTE facilities.
For the past eight years, he has served as a consulting engineer for Kisinger Campo and
Associates, with responsibility for management services on a wide variety of public
works projects for Florida agencies, Florida Department of Transportation, Cities,
Counties, municipalities, and private firms.
Jeffrey T. Krohn
Managing Member and Treasurer
Mr Krohn has strong financial, accounting, and analytical skills, which he currently uses
in the day-to-day management of U.S. EnviroFuels. Mr. Krohn is involved in the
operations of cost and risk management at U.S. EnviroFuels, as well as performing
market development and treasury duties for the company. He plans to be registered and
licensed with the National Futures Association (Series 3 - general commodities license)
in the near future.
Mr. Krohn received his B.S. in Business Administration - Finance from the University of
Vermont. Mr. Krohn has over 20 years of professional work experience on Wall Street.
He has been employed by the following NASD and New York Stock Exchange member
firms: Dean Witter, Prudential Securities, MKI Securities, Murphy and Durieu, and
Schonfeld Securities.
7
United States EnviroFuels, LLC
Steve Sukup
Managing Member
Mr. Sukup is a native of Iowa and has a life-long career in the design and manufacture of
grain handling and storage systems. He and his family are the owners of Sukup
Manufacturing Company, Sheffield, IA. Sukup Manufacturing is a leading designer,
builder, and provider of top quality grain handling and grain drying equipment, and grain
storage bins since 1963. Mr. Sukup provides critical expertise and knowledge in the
optimal design and construction of grain transfer and storage from vessels to bins at our
port locations and ethanol plant facilities. Sukup Manufacturing will design, construct,
and install the grain handling and storage equipment at the planned Port Manatee ethanol
plant. Mr. Sukup received his B.S. in Engineering from Iowa State University.
Tom Kendall
Owner and President
Westshore Company, Tampa, FL
Tom Kendall, via Westshore Co., will serve exclusively as the domestic and international
bulk commodity trading, sourcing, and inventory manager for U.S. EnviroFuels, LLC.
Mr. Kendall has significant career experience in international trading, shipping, finance,
and risk management of international bulk commodities.
In 2002, Mr. Kendall founded Westshore Company in Tampa, Florida to provide bulk
commodity trade services as well as acting as a trading principal. Westshore Co. is the
representative office of Indagro S.A., Geneva, Switzerland for fertilizer and sulfur trade
with North American contract parties. Its trade partners include major petroleum and
agricultural companies including Hess, Cargill, and Sinochem.
Mr. Kendall received his B.S. in Finance and Marketing from Auburn University in 1987.
Project Management: Port Manatee Ethanol Distillery
U.S. EnviroFuels, LLC has completed 18 months project development for a planned 40
mmgy fuel ethanol distillery for Port Manatee, Tampa Bay, Florida. We are currently
establishing a lease option agreement for land and existing infrastructure with the Port
Authority, as well as a land sublease agreement and ethanol service agreement with
TransMontaigne Product Services, Inc. Our target date for groundbreaking for plant
construction is February 2006. The following is a summary of the project management
activities and milestones, which have been or are currently under execution:


Ethanol market validation and feasibility study analysis
Ethanol plant site selection and strategic planning
8
United States EnviroFuels, LLC
















Site, pre-engineering, and process design feasibility study with Delta-T
Establish strategic partners for plant site selection
Project development and business plan
Comprehensive permitting (air, water, land) for ethanol plant
Collaborations with local utilities and fuel providers
Approvals from port directors and county commissioners
Approval for site plan with the county planning commission
Contract local media affairs consultant for public relations media campaign and
community outreach program
Establish total ethanol plant project financing including both debt and private equity
requirements
Establish agreements for process design, engineering, construction
Raw materials and feedstock supply contracts
Ethanol marketing and/or offtake purchase agreements
DDGS and Carbon Dioxide offtake purchase agreements
Establish solicitation, screening, interviews, and hiring of ethanol plant employees
Participate in and facilitate training program of ethanol plant new employees
Management of ethanol plant operations under service agreement
Financing Potential for Port Manatee Ethanol Distillery
The majority of dry grind corn ethanol plants have traditionally been financed via farmer
co-operatives. Under this scenario, groups of corn farmers pool their money to raise
enough grower-based equity to secure debt financing. Recently, there has been entrance
of significant private equity from non-farmer equity sources for financing new ethanol
plants. In particular, new projects outside the corn belt are becoming very attractive to
financial community. Newer ethanol projects using more sophisticated financing,
include:
•
•
•
•
•
Private equity investors
Private equity houses
Hedge funds
Venture capital funds and firms
Greater debt-equity ratios
The opportunities for private equity for financing ethanol plants offer several advantages
over historically-traditional financing approaches. Such advantages include i) Access to
more capital and funds, ii) Greater long-standing relationships with money center
financial institutions, and iii) Equity investors that are not bound by geographic ties to the
corn belt.
The Port Manatee ethanol project falls into this category of newer, more sophisticated
financing, including private equity opportunities outside the corn belt. For the past six
months, U.S. EnviroFuels, LLC has received significant investor interest and private
9
United States EnviroFuels, LLC
equity opportunities from both individuals and corporations. More importantly,
significant Florida investor interest became highly apparent to us prior to public
awareness. We have identified key investors who are highly committed to our project, in
which we have obtained three letters-of-intent for a total of $30 million in private equity
investment.
We have also identified multiple opportunities for senior debt and subordinated debt.
Our bank financing requirements are being met, in which major feedstock supply and
product off-take contracts are being secured. Our cash flow requirements will easily be
met for debt financing. Furthermore, our risk profile will allow for subordinated debt as
an option.
In summary, the financing package has an attractive structure. Banks are offering a
supportive lending rate and equity ratio. Equity investors have a long-term view of the
ethanol plant investment. Most importantly, a strong local interest from local investors
results in multiple benefits to the Manatee County community.
Company Mid-to-Long Term Strategy
Mid to Long-Term Business Strategy
The mid-term to long-term business strategy of U.S. EnviroFuels, LLC strives to focus on
local Florida feedstocks, as well as to build independence from natural gas and petroleum
energy requirements. Our strategy is three-fold:
1. Build multiple medium size ethanol plants in Florida and the Southeast
- Plants scaled to feedstock availability: 40 mmgy - 60 mmgy
- 2-4 ethanol plants for state of Florida, including other Florida seaport sites.
- Co-location strategy potentially with seaports, electric power plants, landfills.
2. Focus on local Florida biomass feedstocks delinked from food and feed use in order
to more uniquely differentiate from corn ethanol plants.
- Commodity risk exposure eliminated by converting citrus pulp waste, fruit &
vegetable waste, and biomass yard waste
3. Establish very low energy costs and independence of natural gas.
- Excess low cost steam accessed by co-locating ethanol plants next to Wasteto-Energy power plants or cogeneration power plants.
- Incorporate ethanol plant footprint that integrates an on-site steam production
process via combustion or gasification of zero cost urban yard and wood waste.
- Urban yard waste: Grass clippings, leaves, tree trimmings, shrubs, weeds
provided at zero cost
- Leverage garbage collection company infrastructure and yard waste processors
10
United States EnviroFuels, LLC
Summary
In summary, U.S. EnviroFuels wishes to be a good neighbor to existing Port Manatee
tenants, and to the residents of Manatee County. Each member of U.S. EnviroFuels, LLC
is environmentally-conscious and ecologically-sensitive on a personal level. We pledge
to the Port Authority Board Members and all Manatee County residents that we will live
up to the responsibility of maintaining a safe, environmentally and economically sound
facility. We will set up our corporate, administrative, and employee offices immediately
next to the ethanol plant at Port Manatee, and we are committed to owning and managing
the Port Manatee ethanol plant for the long-haul. Our goals are with true intentions: To
build environmentally-friendly, "clean, green" ethanol plants, and to help Florida reduce
its heavy dependence on imported gasoline through a Florida-based renewable fuel
industry. Each member of U.S. EnviroFuels, LLC has a tremendous personal passion for
ethanol as clean energy produced through a clean industrial base. And we truly believe in
ethanol as a homegrown, American fuel, which is one piece of the larger puzzle to create
total energy independence in the United States. We believe that our president captured
our company philosophy best by stating:
“Ethanol and biofuels are fuels of the future. These fuels are gentle on the
environment. They are fuels that can be renewed year after year and fuels
that can expand our farm economy. These fuels are made right here in
America so they can’t be threatened by any foreign power.”
––– President George W. Bush,
Farm Journal Forum 2001
11