WestLB Closes $113 Million in Financing for Arkalon Ethanol LLC's 110-MMGY
Ethanol Plant in Liberal, KS

New York, NY—WestLB announced Dec. 19 that it closed a $113 million senior debt facility for Arkalon Ethanol, LLC (Arkalon). The facility includes a USD 97 million term loan for the construction of the plant as well as a USD 16 million working capital facility for operations. The non-recourse financing will be used for the construction of a 110 million gallon per year (MGPY) state-of-the-art corn/milo-based dry mill ethanol plant located in Liberal, KS.

WestLB acted as Sole Bookrunner and Administrative Agent on this financing. WestLB was also a Joint Lead Arranger together with Merrill Lynch. The plant, which is over 90 percent complete, has its first grind scheduled for this week with commercial operation expected in February 2008.

The plant, strategically located near the Union Pacific railroad, has direct access to the premium Texas and California ethanol markets, significant grain feedstock and a large distiller's grain market, making this project very attractive to investors.

Arkalon is being equipped with rail loops providing unit train and 24 hour loading and unloading capabilities.

Kansas is the ninth largest corn producing state and the largest milo producing state.

Over 139 million bushels of corn and 31 million bushels of milo are grown within a 75 mile radius of Liberal.

"This transaction demonstrates that WestLB is able to structure financings that appeal to investors even in volatile markets," said Manish Taneja, Global Head of Loan Syndications. "We are very pleased with the success of this transaction."

The plant's attractive location includes its proximity to large feedlots, providing a strong local distiller's grains market from approximately 1.8 million head of cattle in a 100 mile radius of Liberal.

Arkalon expects to sell 90 percent of its distiller's grains in wet form to local markets via truck, and approximately 70 percent of annual feedstock is expected to be supplied locally.

"The success of this deal was driven by the strength of the project and the persistence of the team in driving it to closure," says Carter Cheek, a partner at Silveron Capital Partners, which advised Arkalon Energy on the debt placement.

For more information, call Ashweeta Durani at 212-852-6310, Connie J. Kain at 212-597-1439.