Return-Path: Delivered-To: smelk@aicenergycorp.com Received: from server.64xmedia.com by server.64xmedia.com with LMTP id OFjNIxuokWDIIwAAdUq3JA (envelope-from ) for ; Tue, 04 May 2021 16:01:31 -0400 Return-path: Envelope-to: smelk@aicenergycorp.com Delivery-date: Tue, 04 May 2021 16:01:31 -0400 Received: from jax4mhob01.myregisteredsite.com ([64.69.218.81]:36878 helo=jax4mhob01.registeredsite.com) by server.64xmedia.com with esmtps (TLS1.2) tls TLS_ECDHE_RSA_WITH_AES_256_GCM_SHA384 (Exim 4.94) (envelope-from ) id 1le1EX-0002Ms-Ru for smelk@aicenergycorp.com; Tue, 04 May 2021 16:01:31 -0400 Received: from mailpod.hostingplatform.com ([10.30.71.211]) by jax4mhob01.registeredsite.com (8.14.4/8.14.4) with ESMTP id 144K0jR0016186 (version=TLSv1/SSLv3 cipher=DHE-RSA-AES256-GCM-SHA384 bits=256 verify=FAIL) for ; Tue, 4 May 2021 16:00:45 -0400 Received: (qmail 3438 invoked by uid 0); 4 May 2021 20:00:45 -0000 X-TCPREMOTEIP: 24.230.175.2 X-Authenticated-UID: kspilman@keitu.com Received: from unknown (HELO RazBerry) (kspilman@keitu.com@24.230.175.2) by 0 with ESMTPA; 4 May 2021 20:00:45 -0000 From: "Kathleen Spilman" To: , "Snow Liu-Melk @AIC" , "John Melk @icloud" Cc: "John Lee @AIC" , "Phil Stack" , "'Kris Keller, P.E.'" Subject: USDA Loan - Cash Flow Positive Analysis Date: Tue, 4 May 2021 15:00:42 -0500 Message-ID: <000e01d74120$2a229f70$7e67de50$@keitu.com> MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_NextPart_000_000F_01D740F6.414C9770" X-Mailer: Microsoft Outlook 16.0 Thread-Index: AddBGA4KoJ0otcgkRveOeoh5tGkPVw== Content-Language: en-us X-Spam-Status: No, score=1.1 X-Spam-Score: 11 X-Spam-Bar: + X-Ham-Report: Spam detection software, running on the system "server.64xmedia.com", has NOT identified this incoming email as spam. The original message has been attached to this so you can view it or label similar future email. If you have any questions, see root\@localhost for details. Content preview: So I spoke with Phil to make sure I lined all of this out currently. Snow called and was asking us to get back to $318 Million as before rather than about $459 Million which is what we submitted. That [...] Content analysis details: (1.1 points, 3.0 required) pts rule name description ---- ---------------------- -------------------------------------------------- 0.0 URIBL_BLOCKED ADMINISTRATOR NOTICE: The query to URIBL was blocked. See http://wiki.apache.org/spamassassin/DnsBlocklists#dnsbl-block for more information. [URIs: keitu.com] 0.0 HTML_MESSAGE BODY: HTML included in message 1.0 KAM_LAZY_DOMAIN_SECURITY Sending domain does not have any anti-forgery methods 0.0 LOTS_OF_MONEY Huge... sums of money 0.0 T_MONEY_PERCENT X% of a lot of money for you 0.1 AWL AWL: Adjusted score from AWL reputation of From: address X-Spam-Flag: NO This is a multipart message in MIME format. ------=_NextPart_000_000F_01D740F6.414C9770 Content-Type: multipart/alternative; boundary="----=_NextPart_001_0010_01D740F6.414C9770" ------=_NextPart_001_0010_01D740F6.414C9770 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit So I spoke with Phil to make sure I lined all of this out currently. Snow called and was asking us to get back to $318 Million as before rather than about $459 Million which is what we submitted. That is likely impossible. Let me layout some realities and recent changes. 1. As of last Friday - we started using 4.5% rather than 3.5% interest rate for the USDA loan 2. We have warned repeatedly that even if we can get the installed equipment cost down to $318 Million, that number has never included working capital. This number for the bank needs to include a realistic number for working capital. You will note $100 Million in just soybean oil costs for feedstock. Now that might be a bit inflated right now as soybean oil has doubled in price over about the last 8-9 months, but we have to have some liquid in the tank to process. Likewise you are going to spend about $20K a day for natural gas as a raw material. You can see some of the other materials we need before we get paid for our products that we need as working capital. There are other explanations that Phil or I can walk you through. We are going to make several major adjustments to the numbers we sent this am - a couple of big ones are going to be dropping down from 90 days to 45 days getting paid for our first product - but there is a real risk that actual cash float is going to be closer to 90 days than 45. We are also dropping the commissions and bonuses - because they will likely not be paid until 12 months of operation. And Phil is dropping down SGA $ numbers below an estimated rule of thumb typically used. Phil and Kris are going to talk about why Kris bumped up the quoted numbers from the vendors. It will take them a day or two to come up with explanations or new numbers. There are other business decisions we can do to get this number down that will likely cause you to loose profit if the target is to be cash flow positive so that you can start repaying the bank loan. Like run the plant at reduced capacity (50% throughput?) which cuts down on the amount of railcars we need to lease or the amount of feedstock oil we have to purchase and pay Savage $1 a barrel to unload and the number of railcars we need to lease, etc. Or start the plant up the first 3 months making only renewable diesel. Then we don't have to buy and hold time for certification prior to shipment (and eventual payment) petroleum-sourced jet fuel to blend with our renewable jet to make SAF. But we honestly believe these are the $ numbers we are going to encounter. Kathleen M. Spilman, P.E. Project Engineer - SAFuels X (Trenton) 1403 27th St NW PO Box 98 Mandan ND 58554 (701) 667-1800 (701) 667-1808 x100 Direct (701) 527-0277 Mobile www.keitu.com ------=_NextPart_001_0010_01D740F6.414C9770 Content-Type: text/html; charset="us-ascii" Content-Transfer-Encoding: quoted-printable

So I spoke with Phil to make = sure I lined all of this out currently.  Snow called and was asking = us to get back to $318 Million as before rather than about $459 Million = which is what we submitted.  That is likely impossible.  Let = me layout some realities and recent changes.

 

  1. As of last Friday = – we started using 4.5% rather than 3.5% interest rate for the = USDA loan
  2. We have warned = repeatedly that even if we can get the installed equipment cost down to = $318 Million, that number has never included working capital.  This = number for the bank needs to include a realistic number for working = capital. You will note $100 Million in just soybean oil costs for = feedstock.  Now that might be a bit inflated right now as soybean = oil has doubled in price over about the last 8-9 months, but we have to = have some liquid in the tank to process.  Likewise you are going to = spend about $20K a day for natural gas as a raw material.  You can = see some of the other materials we need before we get paid for our = products that we need as working capital.

 

There are = other explanations that Phil or I can walk you through.  We are = going to make several major adjustments to the numbers we sent this am = – a couple of big ones are going to be dropping down from 90 days = to 45 days getting paid for our first product – but there is a = real risk that actual cash float is going to be closer to 90 days than = 45.  We are also dropping the commissions and bonuses – = because they will likely not be paid until 12 months of operation.  = And Phil is dropping down SGA $ numbers below an estimated rule of thumb = typically used.

 

Phil and = Kris are going to talk about why Kris bumped up the quoted numbers from = the vendors.  It will take them a day or two to come up with = explanations or new numbers.

 

There are = other business decisions we can do to get this number down that will = likely cause you to loose profit if the target is to be cash flow = positive so that you can start repaying the bank loan.  Like run = the plant at reduced capacity (50% throughput?) which cuts down on the = amount of railcars we need to lease or the amount of feedstock oil we = have to purchase and pay Savage $1 a barrel to unload  and the = number of railcars we need to lease, etc.   Or start the plant = up the first 3 months making only renewable diesel.  Then we = don’t have to buy and hold time for certification prior to = shipment (and eventual payment) petroleum-sourced jet fuel to blend with = our renewable jet to make SAF.

 

But we = honestly believe these are the $ numbers we are going to = encounter.

 

Kathleen M. = Spilman, P.E.=

Project Engineer – SAFuels X = (Trenton)

3D"KECI

1403 27th = St NW

PO Box 98

Mandan ND = 58554

(701) = 667-1800 

(701) 667-1808 x100 = Direct

(701) 527-0277 = Mobile

= www.keitu.com=

 

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