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Greenshift Corporation (BB:GERS)
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23 Apr 2008, 10:26 PM EDT Rating: 
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Msg. 3762 of 9487
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Ed: The speculation in that post is just that - speculation, and it is not at all accurate. The decision to liquidate our investment in the Environmental Services Division ("ESD") was based on simple investment algebra. The ESD was fairly valued at about $5MM in January 2008. We owned 60% of the ESD. Therefore, the value of the ESD to GreenShift was $3MM. We structured a transaction by which liquidation of our investment in the ESD will bring us $3MM in convertible debt reduction ($1MM of which was paid in January 2008 and the remaining $2MM is expected to be paid in July 2008). By reducing our convertible debt by $3MM we increase our borrowing capacity under our traditional debt financing agreements by about $3MM. We can take this additional $3MM and use it to build and install 2 corn oil extraction systems out of our contracted backlog. Each system will produce more than $1.2MM per year in EBITDA (closer to $1.5MM under current market conditions) when sold as corn oil to a biodiesel producer (like we are doing today with our Utica and Western NY oil); and, more than $3MM in EBITDA per system if we were to directly convert the oil ourselves into biodiesel and then sell corn oil derived biodiesel. Take the lower number for now: $1.2MM in EBITDA per system, times 2 systems equals $2.4MM in annualized EBITDA. While our contracts are all for 10 years or more, let's just assume that these two systems are valued at a multiple of 5 times EBITDA, or $12MM. The net impact: 1 - $3MM in enterprise value in the ESD becomes more than $12MM in enterprise value in the two systems; 2 - The two new systems alone would produce about $8MM in annualized sales (versus $15MM in ESD sales) when sold as corn oil (or more than $12MM in sales if we convert the corn oil ourselves into biodiesel and sell the bioidiesel); 3 - Our annualized EBITDA increases from about 60% of about $1MM for the ESD to 100% of more than $2.4MM per year from the 2 extraction systems when sold as corn oil (or more than twice that if converted into and then sold as biodiesel); and, 4 - This is all done in a way that decreases convertible and potentially dilutive debt. Our view is that this is a positive move that maximizes our shareholder value. On a separate note, and in response to concerns about track record: I share that concern and I continue to believe that the first and best thing we can do is to perform and to do so with a visible increase in earnings - not with PR talking about when we think we are going to earn money, but rather with PR and SEC filings showing that we have earned money - after we have earned money. You are aware of the history - we spent years in research, development and commercialization of the metals extraction technology before the market conditions changed and the metal-laden wastes we were processing ceased to have appreciable concentrations of metals. We changed in response and developed a plan to transition away from metals extraction into an improved business model. We then raised over $50MM in fresh capital and invested in and bet on several technologies. Some bets were winners. Others were losers. We restructured around the winners and we ended up with a fantastic technology portfolio, an expanded and highly-skilled team of technologists, engineers and managers, and an improved business model that was devised in part based on the lessons we learned in the past - the lack of feedstock ownership rights, hedged margins, and control of our refining and offtake markets all played a role in the downfall of the metals extraction business. We have all of these elements in our current extraction model and they provide us with highly significant competitive advantages in the current feedstock-constrained and volatile offtake markets. We are done with the development phase of our new model. We are well into commercialization and we are producing results (i.e., cash flows and operating income) in real time with technologies that existed only on the back of a napkin just two years ago. We could (and eventually will) release PR talking about this, or about the acquisition we completed during Q1 2008, or about new and unannounced contracts that we executed for either more corn oil extraction or additional equipment sales, or about the fact that we completed construction on our pilot bioreactor facility, or we could provide an update on our new financings - each as already reported in our 10KSB. None of these releases alone will address concerns about track record; staying focused on executing the strategy outlined on pages 18-20 of our annual report and then releasing PR and filings with actual results after we have executed will. That said, our Q1 2008 report is due in May and we will have additional disclosures out in the short term. I hope that this was helpful. Thank you for your continued interest and support. Best Regards, Kevin Kreisler GreenShift Corporation ED Mace wrote: Hi Kevin, By now I know you are absolutely not going to get into it with message board posters. But until the trend in price indicates a change in sentiment, I would at least like some help to counter some of the bashing. I don't know enough to argue numbers, so could you read this post and point out why they are wrong. The worst year ever is upon us...... because of this "Fact".... Filing Date: 4/7/2008 FORM 10-KSB THE SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 This is why.... "Total revenues for the twelve months ended December 31, 2007 were $29,966,451", .....Over 1/2 of that ($ 15,286,064.00) came from their Environmental Services Business ..... Kevie K just sold the Environmental Services Business to his "good friend for only" 2 million ! I know what your thinking, how could he sell something that was bringing in over "15 million a year" for 2 million ?.. Wealthy, from the Ragingbull board said "LK and KK owed him".....I say if Lk and KK owed him, let them pay him back with their money, NOT the share holders money..... KK the next time you're selling off the "share holders asset" to your friends (for a fraction of what there worth), call me, I'll be your friend !..... I use this disrespectful post because it should easily be countered. Thank you for your help and good luck. (Voluntary Disclosure: Position- Long) - - - - - View Replies » |
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