Société Générale Arranges $158 Million of Senior Secured Cred…

Société Générale Arranges $158 Million of Senior Secured Credit Facilities to Landmark Ethanol Plant

Washington, D.C., August 2, 2006 – LAWFUEL – Law News Network – Baker & McKenzie LLP announced today that it represented Société Générale in connection with the debt financing of Panda Ethanol Inc.’s 100 million gallon-per-year ethanol facility currently under construction in Hereford, Texas. Panda’s Hereford project is the first large ethanol project that will utilize manure to generate the thermal energy necessary to produce ethanol. The Hereford project is the first of a number of such projects that Panda Ethanol plans to build throughout the United States.

Société Générale arranged approximately $158.1 million of senior secured debt facilities, including a $50 million letter of credit that supports tax-exempt bonds issued by the project and a $5 million working capital facility. The financings closed on July 31, 2006.

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) or in places such as Texas where energy costs are lower and costs of production can be minimized. Panda’s Hereford plant further expects to lower its energy costs by gasifying more than 1 billion pounds of cow manure per year to generate the steam needed to manufacture ethanol.

“We are pleased to have worked with Société Générale in arranging the debt financing for the Panda Hereford project. The successful financing of this project proves that the financial community supports well-engineered, technologically-advanced ethanol projects where the economics justify their location outside of the U.S. Midwest,” said Chris Groobey, a project finance Partner in Baker & McKenzie’s Washington, D.C. office.

Groobey added, “With the successful closing of this transaction for Société Générale, we have now represented the lenders to the first plant in Texas and the first large-scale plant to use biomass as a fuel source, 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.”

In June, Baker & McKenzie represented the lenders to the first East Coast ethanol plant — the Northeast Biofuels project in upstate New York. In April, the Firm represented the lenders to the first destination ethanol plant – the Pacific Ethanol project in Madera, California.

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