Sunday, November 9, 2014

Why environmentalists should oppose the Oregon "clean fuels" nonsense

A big story below, showing yet again that biofuels are expensive tax-wasting lies, aimed at propping up the liquid fuels paradigm and extending the reign of Big Oil.  

Contrary to the nonsense peddled by the captive "green" groups (who accuse anyone who notices that Emperor Biofuels is stark naked of being in the pocket of Big Oil) the reality is that Big Oil LOVES biofuels because they are useful to keep people fantasizing about the continuation of auto dominance a while longer, which helps keep people from realizing that the auto age is ending, which gives Big Oil even more time to milk the suckers before they all go broke.

Biofuels have no energetic advantage, no carbon advantage, and are basically just a system for laundering fossil fuels through a greenwash propaganda system fueled by insane public funds giveaways and tax subsidies. 

Morally biofuels are even worse than fossil fuels -- since biofuels combine all the environmental costs of fossil fuels plus the moral obscenity of making hungry people watch while land is taken out of food production use and turned over to agribusiness for production of motor fuel ... A fuel that is only really a phony fuel, since the net energy return over the fossil fuel inputs is infinitesimal.

The one downside to the Democratic victories in Oregon is that the Kitzhaber administration has been totally bamboozled or bought off by the biofuel propaganda and thinks they are worth pouring money into. Which explains why mainstream Oregon green groups are terrible on biofuels, ignoring science when it suits them just as the Rs do habitually.

KiOR in Default on Loan
// R-Squared Energy Blog

Update 4:30 PM PST: This afternoon KiOR filed a Form 8-K with the SEC. This form is used to notify investors of important material events. In the report, KiOR indicated that they had received a Notice of Default and Acceleration from the Mississippi Development Authority (MDA) notifying KiOR that all obligations are now due and payable within three (3) business days from November 3, 2014. This default accelerates KiOR's other loan obligations. In addition to the $78.6 million now payable to the MDA, KiOR says this default "accelerates the Company's obligations under the following debt agreements:"

  • Loan and Security Agreement, dated January 26, 2012, among the Company and each of 1538731 Alberta Ltd. as agent and lender, 1538716 Alberta Ltd. and KFT Trust, as amended on March 17, 2013, October 21, 2013 and March 31, 2014. As of November 3, 2014, an aggregate amount of approximately $127.8 million is immediately due and payable. As a result of the MDA Notice, the loan accrues an additional four percent (4%) per annum default interest rate.
  • Senior Secured Convertible Promissory Note Purchase Agreement, dated October 18, 2013, among the Company, KiOR Columbus, KV III, KFT Trust and VNK Management, LLC and KV III in its capacity as agent, as amended on October 20, 2013 and on March 31, 2014. As of November 3, 2014, an aggregate amount of approximately $95.7 million is immediately due and payable.
  • Senior Secured Convertible Promissory Note Purchase Agreement, dated March 31, 2014, as amended on July 3, 2014, among the Company, KiOR Columbus and KFT Trust and KFT Trust in its capacity as agent. As of November 3, 2014, an aggregate amount of approximately $10.4 million is immediately due and payable.

So KiOR now owes, immediately due and payable, over $312 million. On the plus side, the 8-K notes "KFT Trust made a Protective Advance to KiOR in the aggregate principal amount of $1,102,691." That is such a specific amount that I wonder if that might be the bill from the investment bank that has been shopping KiOR during the forbearance period.

My guess is that this now triggers a bankruptcy declaration next week.


During the administration of former Republican Governor Haley Barbour, the state of Mississippi provided a $75 million no-interest loan to advanced biofuel company KiOR (OTCMKTS: KIOR) to build a plant in that state. Last Friday KiOR was supposed to make a $1.875 million payment on the loan. The loan payment had been due at the end of June, but KiOR paid $250,000 for a 120-day reprieve to give them more time to explore options on selling or merging the company, which has had its plant in Mississippi idled all year. The loan originated with the Mississippi Development Authority (MDA), and they confirmed for me this morning that KiOR missed the October 31st deadline, and a three-day grace period on the loan had ended on Wednesday, November 5th with no payment. I spoke with the MDA this morning, and afterward they sent me the following written statement:

"As of today (November 7, 2014), KiOR has not made its loan payment. MDA is working closely with its counsel and financial advisors to evaluate all options with the intent of finding the best solutions for the state in regard to the KiOR Columbus project. MDA continues to assess any and all rights and remedies it has available and will provide updates once next steps are fully determined." -Marlo Dorsey, Chief Marketing Officer, Mississippi Development Authority

So what does this mean? It means that KiOR is now in default on the loan, and the MDA can legally seize the plant and demand the remaining balance of $69.4 million on the loan. This would allow KiOR's other lenders to demand immediate payment of the $250 million it owes them. KiOR acknowledged in their most recent Quarterly Report to the Securities and Exchange Commission (SEC) that this action would likely force the company to declare bankruptcy:

In the event of an acceleration of amounts due under its debt instruments as a result of an event of default, the Company will not have sufficient funds and does not expect to be able to arrange for additional financing to repay its indebtedness or to make any accelerated payments, and the lenders could seek to enforce their security interests in the collateral securing such indebtedness, in which case the Company will likely be forced to voluntarily seek protection under the U.S. Bankruptcy Code.

Where does this leave the state of Mississippi? The ball is in their court, but the state is in a difficult position. Their best option was for the company to find a buyer so the loan from the state could be repaid. But KiOR presently owes $250 million, lists assets of only $58 million (and $50 million of that is for the plant that isn't running), and a market capitalization of under $5 million. It is also facing another $1.875 million payment at the end of next month. It is not surprising that in that financial condition the company didn't find a buyer during their 120-day forbearance. But if the state exercises their right to seize the plant, they are then in the position of trying to find a buyer or of selling the plant for scrap value (which will be less than $50 million).

The most recent precedent for this type of outcome is in the Range Fuels bankruptcy. Following more than $160 million in venture capital, a $76 million grant from the U.S. Department of Energy, a $6.25 million grant from Georgia, and an $80 million loan guarantee from the U.S. Department of Agriculture, Range Fuels was still unable to produce transportation fuel. They were forced to declare bankruptcy, and the plant was auctioned off to pay for part of its debts. The plant ultimately sold at auction for $5.1 million.

By defaulting and failing to negotiate additional time with the state of Mississippi — and allowing themselves to be delisted from the NASDAQ without a fight — it appears that KiOR is resigned to its fate. That fate presently lies in the hands of the state of Mississippi, which will seek the best possible outcome for taxpayers while trying to manage the political fallout which is sure to come.

What do I believe will happen? I still think bankruptcy is the most likely outcome given the company's relative debts and assets, and considering that the plant hasn't run all year and most of the employees have been let go. At this point they appear to have given up stalling for more time, and they would need to be extremely creative to craft a scenario in which they manage to avoid bankruptcy. Their only hope at this point is with the MDA deciding that forcing them into bankruptcy isn't the best scenario for Mississippi taxpayers.

Link to Original Article: KiOR in Default on Loan

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.


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Minnesota judges say we must admit "we have a problem with race" in the criminal justice system [feedly]

Will Oregon follow suit? Other states?

Minnesota judges say we must admit "we have a problem with race" in the criminal justice system
// Sentencing Law and Policy

Kevin Burke, a Minnesota county district judge, has authored this provocative new commentary which was signed on to by a number of fellow judges. The piece is headlined "On race and justice system, we're still in denial," and here are excerpts:

Repeatedly, we have been confronted with compelling evidence that our community has a serious problem with racial disparity in its justice system.  Repeatedly, we have either said, "We can stop," or we get defensive and attack the messenger.  The time has come for us to change our response.

The recent report by the American Civil Liberties Union of Minnesota (ACLU) on the racial disparities of arrests comes as no particular surprise ("ACLU: Blacks arrested more for minor crimes," Oct. 29).  Sure, you could write off the ACLU as some leftist organization — except that its report is based on hard data.  The ACLU's data and its analysis replicate numerous studies dating back decades about the problem of racial disparity in the justice system in our community....

[I]n 2007, the Minneapolis-based Council on Crime on Justice issued a report that found that "[t]he racial disparity in Minnesota's justice system is exceptionally high compared to other states. From arrest to imprisonment, the disparity is over twice the national average."  Since 2000, the report said, the Council on Crime and Justice "has undertaken seventeen separate studies in a comprehensive effort to understand 'why' such a large disparity exists here, in Minnesota."...

We need to accept we have a problem.  All of us have a right to be safe, but protecting the public and being racially fair are not mutually exclusive.  The ACLU report is interesting, in part, because it is not focused on "serious" or "violent" crime.  There is no legitimate reason why there is a vastly disproportionate arrest rate for young black people for possession of small amounts of marijuana or for loitering.

The justice system desperately needs the trust of the public.  Community policing is premised upon community support.  But before you conclude that this is a problem with the Minneapolis police — stop.  All of the police, prosecutors, defenders, corrections officials and the community at large own a piece of the mess.  And yes, so do the elected officials — including judges.  Every one of us in the justice system bears responsibility for this problem....

There is a connection between racial disparity in the justice system and what is happening in our community.  Child protection failures, racial disparity in low-level offenses, achievement gaps in school, and yes, even violent crime and gang problems are all related. The beginning of an end to these issues starts with a collective admission that we have a problem with race.

The solutions to our problem of racial disparity in the justice system may be as intractable as our failure to acknowledge the existence of the problem, but we have no choice other than to act.  At a minimum, we need to acknowledge the cumulative nature of racial disparities. Racial disparity often builds at each stage of the justice continuum, from arrest through release from prison.  And even then it does not stop.  Employment opportunities for ex-offenders are limited.  Hennepin County has a history of very good dialogue among the justice system participants, but in order to combat racial disparity, everyone needs to commit to a systematic approach.  Without a systemic approach to the problem, gains in one area may be offset by reversals in another....

Given the persistence of the problem of racial disparity in the justice system, however, a very good case can be made that reasoned experiments to find solutions are a better alternative than continually repeating what we are presently doing — and hoping for a different result.

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The Myth of Chinese Super Schools by Diane Ravitch | The New York Review of Books

Salem and Oregon seem to have fallen into the foolish "If you can test for success, then the more you test, the more your success" abyss, alas.

It's cargo cults everywhere you look these days, it seems -- people who never really understood the forces at work that produced the magical amounts of wealth in the first place, now madly seeking to replicate the symbols (effects) of that wealth that they confuse with its causes.

Diane Ravitch is a real gem.

"Let's live on the planet as if we intend to stay."

A great group of local heroes to be thankful for