Jefferies Arranges Equity, Goldman Sachs Arranges Debt and Provides …

Jefferies Arranges Equity, Goldman Sachs Arranges Debt and Provides “Crush-Margin” Hedge for First Large Ethanol Project on U.S. East Coast

Washington, D.C., July 17, 2006 – LAWFUEL – Law News Network – Baker & McKenzie LLP announced today that it represented Jefferies & Company, Inc., and Goldman Sachs & Co. in connection with the equity and debt financing of the Northeast Biofuels project, a 100 million gallon-per-year ethanol facility currently under construction in upstate New York. The Northeast Biofuels project is the first ethanol project in New York State, the largest to be constructed on the U.S. East Coast and the first to utilize a crush-margin hedge that essentially locks in the project’s profit margins.

Jefferies & Company raised approximately $40 million in equity for the project and Goldman Sachs arranged a $140 million term loan and a $12 million working capital facility. Goldman Sachs also arranged a $65 million letter of credit facility to support a first-of-its-kind “crush margin” hedge provided by Goldman Sachs’ Global Commodities division. The equity and debt financings closed on June 30, 2006.

Baker and McKenzie initially represented Jefferies & Company in connection with raising the equity for the project, including helping to identify potential investors. Once the equity was arranged, Baker & McKenzie represented Goldman Sachs with respect to the project-related aspects of the debt transaction.

Ethanol plants have historically been located in the “corn belt” of the U.S. Midwest, where they are close to sources of corn but far from the largest ethanol markets. Increasingly, developers of ethanol plants are building “destination” ethanol plants in states such as California and New York — the largest markets for ethanol.

“We are pleased to have worked with Jefferies & Company and Goldman Sachs in arranging the equity and debt for the project. The successful financing of this project proves that the financial community will support large ethanol plants on the U.S. East Coast and that hedging strategies can be applied to the ethanol industry in a manner that benefits both the sponsors and the lenders,” said Chris Groobey, a project finance Partner in Baker & McKenzie’s Washington, D.C. office.

Groobey added, “Baker & McKenzie recently represented lenders in the financing of the first destination ethanol plant, Pacific Ethanol’s project in Madera, California. With the Northeast Biofuels transaction, we have now represented the financiers in the first large ethanol project on the U.S. East Coast, further strengthening the Firm’s leading position as counsel to lenders and investors in the largest and most innovative ethanol projects in the U.S.”

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