Earth Biofuels acquires up to 5 Mgy in yellow grease feedstock in deal with Alliance Processor

In Texas, Earth Biofuels has signed an agreement with Alliance Processor to acquire 267,000-400,000 gallons per month of yellow grease, primarily from restaurants. The price of yellow grease is materially lower than the price of soybean oil, the feedstock used by most US biodiesel processors.

Earth Biofuels said last month that it has executed a settlement agreement with a group of creditors that would dismiss the group’s petition for involuntary bankruptcy.

In the agreement, Earth Biofuels will issue securities to the creditors and execute a restructuring plan by March 2008.

Earth BioFuels will repay interest and fees plus more than $100 million in principal, and the company’s CEO will issue a limited personal guarantee. The company recorded a loss of $21 million on revenue of $4.8 million in the first half of 2007.

In November, the Willie Nelson-backed company, in an SEC filing, expressed doubt over its ability to survive. Earth Biofuels (EBOF.OB) is a component stock in the Biofuels Digest Indexâ„¢.

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