Agri Beef Co. said Thursday it has reached a tentative agreement to restructure its $8 million loan to North Star Biofuels, a joint venture between California-based R. Power Biofuels and Agri Beefs own subsidiary, AB Bioenergy.
According to Agri Beefs lawsuit, North Star sought the loan to build the plant in Watsonville, Calif., using innovative methods licensed to R. Power and its affiliate Sauber LLC. Agri Beef was willing to lend the money in February 2012 because the company is interested in new technology using feedstock generated from the production of animal protein, the lawsuit said.
The loan, due July 1, became overdue when the opening of North Stars new biofuel plant in Watsonville, Calif., was delayed because of malfunctioning equipment provided by a third party, Agri Beef's attorney Kelly Greene McConnell said. Agri Beef filed a breach of contract lawsuit July 12 at Boises federal courthouse.
OConnell said both parties now expect the lawsuit to be dismissed. They are committed to continuing development of this environmentally friendly renewable energy project, she said.
According to North Stars website, the plant is expected to have a production capacity of 1,000 barrels per day, a big leap from the companys previous production of about 50 barrels a day.
Agri Beef raises and feeds cattle, processes beef at its Toppenish, Wash., plant, and sells beef under the Snake River Farms, Double R Ranch, St. Helens Beef and Rancho El Oro brands.
North Star Biofuels produces biodiesel from animal fats and other raw material under the R Power product line, using R Power processes aimed at producing a pure product that functions well in cold temperatures.
The lawsuit sought $8.1 million in principal and interest, additional interest as it accrues, and a foreclosure decree that would allow Agri Beef to seize and sell property the defendants put up as collateral on the loan.