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Investor Meetings
Agenda
• Welcome
• Feasibility
• The Process
• The Project
• The Markets
• Assumptions
• Investment options
• Governance
• Recap
• Q&A
NEDAK, LLC Board of Directors
Jerome Fagerland Todd Shane Everett Vogel Tim Borer Gerald Winings
General Manager 1320 N. 8th Street PO Box 159 87992 478th Ave PO Box 21
NEDAK - Atkinson O’Neill, NE Stuart, NE Atkinson, NE Atkinson NE
402-925-5570 402-336-1751 402-924-3616 402-925-5671 402-925-2221
Paul Seger Steve Dennis Dick Bilstein Kirk Shane Jeff Lieswald
PO Box 99 406 S. 10th Street PO Box 855 88055 St. Hwy 11 PO Box 753
Atkinson, NE O’Neill, NE Atkinson, NE Atkinson, NE Atkinson, NE
402-925-5461 402-336-4947 402-925-2251 402-925-5629 402-925-2913
Paul Corkle Robin Olson Ken Osborne Clayton Goeke
PO Box 795 PO Box 787 47658 E. Pearl St. 48266 Kensington Rd
Atkinson, NE Atkinsn NE Atkinson, NE Atkinson, NE
402-925-2545 402-925-5090 402-925-2283 402-925-2311
The NEDAK Team
• Engineering (Delta-T Corporation, Williamsburg, VA)
• Construction (Gemma,Glastonbury, CT; Brink Designs,Atkinson, NE;
David Stanley:Project Manager, Norfolk, NE)
• Permitting (HDR Engineering, Omaha, NE)
• Marketing (ECO Energy, Franklin TN; Frahm-Deitloff CC Ag, Wisner,
NE; Meuret Grain, Brunswick, NE )
• Legal (Cline, Williams, Wright, Johnson & Oldfather, Lincoln, NE;
Blackwell, Sanders,Peper, Martin, Omaha, NE; Strope, Krotter, Gotschall,
O’Neill and Atkinson, NE )
• Financial/Accounting (Christianson & Associates, Willmar, MN;
Boulay, Heutmaker, Zibell PLLP, Minneapolis MN, Carl Roberts CPA,
Atkinson)
• Legislative & Regulatory Counsel (Schmit Enterprises, Lincoln,
NE)
• Overall Project Development (Durante Associates, Bethesda, MD,
NPPD, Lincoln, NE; Kinder Morgan, Lombard, IL; Cornerstone
Energy,Omaha NE; KMA Insurance, Burnsville, MN; North Central
Insurance, Atkinson, NE)
Representing years of cumulative experience working to support the
NEDAK ethanol project.
Ethanol Plant Requirements
1. SITE QUALIFICATIONS
2. BUSINESS ECONOMICS
3. PROJECT FINANCING
4. INTANGIBLES
1. Site Qualifications
Roads
Water
Boiler Fuel
Electricity
Acceptable Proximity to Rail
Permits
Community Acceptance
2. Business Economics
•Feedstocks – 80 Million Bu. /65 mile radius
(USDA)
•Markets – National Demand
•Costs and Efficiencies – Low corn costs
compared to Chicago Board of Trade
•Livestock – Feedlot capacity for over
200,000 head in 100 mile radius
3. NEDAK Financing Steps
•Grants or In-Kind - $38,500 Feasibility Study
•Seed Capital - $2,050,000
•Investor Equity – Minimum $35,000,000;
Maximum $60,000,000
•Debt Finance – Maximum $50,000,000;
Minimum $25,000,000
Intangibles
•Leadership and Local Initiative
•Timing
•Image
•Dedication and Hard Work
Designing ethanol
processing since 1984
The Ethanol Plant
• NEDAK has partnered with Delta-T Corporation of
Williamsburg, Virginia, an experienced design, build and
development company that has a successful track record of
building plants.
• The plant will be rated for 44 million gallons per year, with the
capability to easily expand.
• Permits have been filed with the Nebraska Department of
Environmental Quality and are expected to be issued.
• The Engineering-Procurement-Construction (EPC) contract will
provide performance guarantees covering process, cost and
schedule.
ACE Ethanol
Stanley, WI
Ut ica Energ y
Oshk osh, WI
Chippewa Valley Ethanol
Benson, MN
15mgy Est. 1996
Ch i p p ew a Val l ey
ex p an d ed t o 4 5 MGY i n cl u d i n g
i n d u st r i al an d b ev er ag e cap aci t y
NEDAK Ethanol LLC
Atkinson, Nebraska
The NEDAK Opportunity
• NEDAK Ethanol is a group of investors committed to the economic
growth of Holt County and surrounding areas.
• NEDAK will build a 44 MGPY fuel grade ethanol facility, centrally
located in Holt County (Atkinson) Nebraska.
• The project will process more than 17 million bushels of corn
annually into ethanol and high quality distillers grain.
• Three years of planning by the NEDAK Board coincides with the
passage of landmark federal legislation that requires increasing
demand for ethanol over the next 7 years.
Why NEDAK?
• The NEDAK Board has developed a feasibility study, a business
plan, and after extensive homework the board and supporting team
are proceeding with the ethanol plant project.
• Holt County and surrounding area farmers produce some of the
lowest priced corn in the United States, which will help to ensure
that NEDAK ethanol can be price competitive with other producers.
• From the location of the NEDAK plant, ethanol can be economically
shipped by truck, or truck-to-rail.
• NEDAK has entered into agreement with an experienced ethanol
marketing firm to market ethanol.
• The NEDAK plant will be located within easy, economical reach of
feedlots thereby allowing for the profitable marketing of modified
distillers grains, a valuable co-product of the ethanol process.
A Strong, Community Based Project,
With Benefits the Communities Will See
According to the Impact Study done
by the Economic Development
Department at Nebraska Public
Power, the project will boost the
local economy by:
• Increasing the value of local grain.
• Creating a total of 112 direct and
indirect jobs.
• Generating more than $1.5 million
in local retail sales, and generate
$1.4 million in tax revenue.
The NEDAK Corn Price Advantage
Average Corn Prices
$4.00
$3.50
National Price O'Neill Elevator Price
Average Price/Bushel
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Source: National price data – USDA; O’Neill price date – Durante Assoc.
Potential Risks
Risks include but not limited to:
• NEDAK is in a development stage
• Our membership units have no public trading
market
• Our assumptions concerning our financing
requirements may be incorrect
• We may not generate sufficient revenues to meet
our debt service obligations
• We may experience construction difficulties
• We may face risks relating to federal ethanol
subsidies,public sentiment, environmental
restrictions and ethanol demand
How Have the Risk Factors
Changed?
Early Plants Today
Inadequate Technology Performance Guarantees
Inefficient Plant Design Improved by a factor of 3
Inaccessible Markets Worldwide/Expanding
*Under Capitalization Equity/Cash Reserve
*Poor Management Expanded talent pool
*These two issues remain but can be mitigated through quality decisions.
WHAT’S DRIVING ETHANOL
DEMAND?
•The Energy Policy Act of 2005
•World energy demand and high crude oil prices
•The Clean Air Act Amendments of 1990
•Unprecedented U.S. gasoline demand
•The phase-out of MTBE from U.S. gasoline
•Continued demand for gasoline octane
•U.S. oil refineries are operating at capacity
•A general movement toward renewable energy
Specific Demand Factors
• Based on Federal requirements and industry projections,
the demand for domestic, renewable ethanol is growing
with an annual increase projected to be nearly 1 billion
gallons per year.*
• World energy demand, finite domestic oil supply, limited
refining capacity, and U.S. fuel demand should support
ethanol production for many years.
• Federal and state energy policies reflect the growing
importance of ethanol in the U.S. fuel mix.
* Requirements: Energy Policy Act of 2005; Projections by Durante Assoc.
Ethanol Growth and Future Demand
8
7.5
7
6.5
6
5.5
Billions of Gallons
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
• The Energy Policy Act of 2005 was signed into law by President
Bush on August 8, 2005, establishing a requirement that all motor
fuel sold in the U.S. include a renewable content. Beginning in 2006
the demand resulting from this new legislation is illustrated above.
Source: Clean Fuels Development Coalition
Ethanol’s Environmental
Benefits
• Reduces emissions of CO, exhaust
VOCs and NOx, particulates,
hydrocarbons
• Displaces toxics – benzene, toluene
• Renewable – reduces greenhouse gas
emissions
• Displaces fossil energy use
• Reduces CO and ozone through oxyfuel
and RFG programs
Energy Security Benefits
• 2/3 known oil reserves in Mideast
• Use of ethanol displaces imported oil
(23.3 gallons of ethanol = 1 barrel of oil)
• Today 97% of transportation energy comes
from petroleum, of which 61% is imported
• U.S. energy imports to grow from 62% in
2002 to more than 77% in 2025
• A dispersed energy infrastructure is less
vulnerable to terrorist attack
Source: Dupont conference with Delta T in March 2005
Price Fluctuations
• Every $0.10 change in the price of ethanol will result in a
change of $4 million in annual ethanol revenues.*
• Every $0.10 change in the price of corn will result in a
change of $1.6 million in annual production costs.*
• The price fluctuation of corn purchases can be partially
offset by corresponding price movements of distillers
grains.
*Source: Original Research Done by Durante Associates
Investment risk due to commodity price cycles
Standard Depiction of projections from a 40mgy Midwest Ethanol Plant
Pretax Return, Based on 40% Equity, 60% Debt
Natural Gas@ $7/MM BTU and Electricity @ $0.045/Kwh
Source: Original Research Done by Delta-T Corporation
ETHANOL PRICE
$1.15 $1.21 $1.35 $1.45 $1.55 $1.65 $1.85
$2.00 21.5% 31.2% 50.2% 65.3% 80.0% 94.6% 123.8%
CORN PRICE
$2.20 11.0% 20.8% 40.3% 54.9% 69.5% 84.2% 113.4%
$2.38 1.7% 10.5% 30.9% 45.5% 60.1% 74.8% 104.0%
$2.50 -4.6% 4.2% 24.6% 39.3% 53.9% 68.5% 97.7%
$2.80 -20.3% -11.5% 9.0% 23.6% 38.2% 52.8% 82.1%
$3.00 -30.7% -21.9% -1.5% 13.2% 27.8% 42.4% 71.6%
$3.50 -56.8% -47.0% -27.6% -12.9% 1.7% 16.3% 45.5%
Sources and Uses of Funds
Sources
Minimum Maximum
Offering Offering
Equity Offering Net Proceeds $34,765,000 $59,765,000
Private Offering Net Proceeds (1) 2,050,000 2,050,000
Debt Financing 48,285,000 23,285,000
TIF Note Financing 5,000,000 5,000,000
Total Sources of Funds(2) $90,100,000 $90,100,000
(1) Includes purchase of 407 units for $5,000 per unit and loans totaling
$15,000 by members of the Board of Directors
(2) Excludes approximately $2.4 million in Nebraska sales tax payments and
an equal amount of sales tax rebates.
Sources and Uses of Funds
Uses of Funds
Minimum Maximum
Offering Offering
Costs of Equipment and Construction
Of the Ethanol Plant $72,400,000 $72,400,000
Land and Site Preparation 750,000 750,000
Engineering and Architectural fees 700,000 700,000
Bonding and Insurance 1,500,000 1,500,000
Rolling Stock, Office Equip., Water Treatment 400,000 400,000
Rail Transfer Facility 2,000,000 2,000,000
Contingency Reserve 4,000,000 4,000,000
Capitalized Interest and Financing Costs 1,300,000 1,100,000
Start Up Expenses: Through first month 2,000,000 2,000,000
Cash Reserve 5,050,000 5,250,000
Total Uses of Funds (2) $90,100,000 $90,100,000
(2) Excludes approximately $2.4 million in Nebraska sales tax payments
and an equal amount of sales tax rebates.
Where will the equity come from?
• 6,000 Membership Units Available @ $10,000 Each
• Minimum sales needed 3,500 Units = $35MM
• Maximum Available 6,000 Units = $60MM
• 6 Unit average with 584 Members = $35MM
• 4 Unit average with 875 members = $35MM
• TARGET = 1000 Members @ 6 Units = $60MM
NEDAK Investment Options
• Minimum 3 units = $30,000
• 4 units = $40,000
• 5 units = $50,000
• 6 units = $60,000
• 7 units = $70,000…..
• Maximum investment = 40% of
outstanding memberships
Governance
•NEDAK will be managed by a Board of Directors
•Members will elect Board of Directors
•Board of Directors will consist of a minimum of 12
maximum of 18 persons
•NEDAK may hire a Management Company
•NEDAK will hire Professional Marketers
Recap
• 44,000,000 Gallon Ethanol Plant
• Estimated Cost $90,100,000
• Construction completed in
approximately 14 months
• LLC structure, owned by Investors
• Start-up in second half of 2007
Sign Up Procedures
• Read the Offering Document
• Complete and sign Subscription Application and
Agreement – Found in back of Prospectus
• Write check for 100% of expected investment
– Sign up at this meeting
– Sign up at NEDAK office
– Mail in agreement with check for
100% of investment
Question & Answer
