Podcast: Progressive Rail interview post-mortem

Here’s the 3rd part of our series of podcasts related to our interview with Dave Fellon, president of Progressive Rail.

(Part 1 is blogged here; Part 2 is here.)

The three of us did this ‘post-mortem’ last Friday in Tracy’s office. (The photo is an oldie.)

Click play to listen (28:25 minutes). Segments: 0-5:15: commuter rail; 5:15-11:00; freight infrastructure: 11:00-28:25: proposed ethanol plant.

You can also subscribe to the podcast feed, or subscribe with iTunes.

We seek your comments and suggestions. Attach a comment to this blog post, use the Contact Us page to send us email, or submit an audio comment. See the show archives for audio of other episodes.

9 thoughts on “Podcast: Progressive Rail interview post-mortem”

  1. Griff, Tracy and Ross,

    I sat down just now to hear the “post mortem,” in hopes that the gag reflex I am still experiencing after 38 minutes of drivel from Dave Fellon on the train trip (Part 2) last night would go away.

    Wrong. Either you folks chugged the KoolAid or I and others in the township have failed to offer you basic information as to township zoning, how heavy industry ended up in the ag zone, streamlining of MPCA environmental review and DNR water permits, etc. Do read my 12-13 paragraph response to Part 2 audio with Fellon on the rail trip. You will find a few basics there.

    To be fair, I would guess you folks had too much on your plate to pay attention earlier and it’s just hard to catch up. But do take a trip with Steve Albers and Bill Hoover through Little Prairie Community. Do it soon. Then do a tour of a large ethanol plant–don’t just drive around it but walk through its operation with the big boss so you fully understand that this is a refinery. Interview near neighbors, that is crucial.Then you’ll know what we’re facing.

    As far as needing another ethanol forum, township residents have been exposed to quite a lot of information in the past six months. As I mentioned before, the township offered an ethanol information meeting Nov. 4 attended by about 200 people. There were a dozen speakers, half of them associated with Advanced BioEnergy. They laid their best figures and claims on us.

    Stephenson and Don Gayles of ABE did the same power point for 150 farmers, agri-businessmen and bankers at the Faribault Chamber Annual Farm Business Luncheon on November 16. They gave out the contact numbers for our township supervisors in an obvious effort to influence important township meetings on Dec. 6 and Dec.11. There has been no lack of information, except in the Northfield araa. That’s where another forum might be held.

    Upcoming events:
    CRWP will be doing their Summit on biofuels in March. Meanwhile, LWV, CRWP and St. Olaf are sponsoring a presentaton by Jason Hill Jan. 18 at St. Olaf, Science Center 252. The space is reserved 6:30 to 9 pm, so there will be opportunity to mix and mingle before and after the talk.

    Remember, townships have the right in state law to protect themselves from unwanted development by undertaking their own planning and zoning. I give my supervisors a lot of credit for taking this step. The matter is in their court.

    The township was hit with a final PR effort in the form of “Prairies to Power” mailings, ads and now the radio program for another 3 months, hoping to influence the township planning commission and supervisors in the writing of the township ordinance.

    This is heavy-handed, but as you say Griff, you don’t begrudge them that. Dave Fellon comes across, after all, as the nice guy. The argument for an industrial park at the site due to proximity to an old rail junction might be important if 71% of our residents didn’t put first priority on keeping the rural nature of the township. The vision for our six miles square should be ours.

    End of chapter two.

  2. Thanks for the detailed response, Stephanie.

    Tracy’s on vacation this week, I’m swamped with work and Ross has a lot of soap operas to watch so it may be next week before we can get back to some substantive conversation about this.

  3. Griff,

    Just a correction to the location of the Jason Hill talk on biofuels at St. Olaf on Jan. 18 that I mentoned above:

    Location is SC 282 (not 252). Same floor, so I suppose people will get to the right room. The Mike Bull talk is the night of Jan. 17 in Rosemount. Would have been nice to have both speakers at one event so the audience could compare/contrast. Oh well.

    Ethanol info is ending up under so many different headings on your blog that it’s hard to track back to them. Any chance we could combine? Took me all night to do my 12-paragraph Chap. 1 response to the train ride and even I can’t find now. So, I am taking a breather, too.

    Watch for news of upcoming Bridgewater Candidate Forum. The ethanol and township planning issues may bring out some challengers for the supervisor seat currently held by Leif Knecht who is up for reelection on March 13. Should be an interesting forum.

  4. As someone with a highly unusual interest in trains who grew up not too far from this area, this is a pretty engaging topic for me.

    With regards to the trains, the diesel-electric locomotives that Progressive Rail uses aren’t using any extraordinary technology (5:28). The locomotives have diesel powered generators, which provide the electricity that actually turns the wheels by means of electric motors.

    Newer technology is being developed, where the energy dissipated by decelerating the train is stored in batteries and then used to help accelerate the train (that’s a hybrid locomotive). There are also some other schemes where there are several small electrical generators that can be turned on and off as needed, but neither of these techniques are widely used in the US right now.

    Speaking of employee owned railroads (10:55), C&NW, which ran through Northfield and was merged into UP, was an employee owned railroad, as their logo once proclaimed.

    With regards to economic development, having taken a tour of the Airlake Industrial Park in Lakeville, which looks to be in a pretty similar setting to the area in Bridgewater Township, I must say it’s not something that I would mind living near. If it works out that Ethanol is an evil boogie man that needs to be kept out, so be it, however, I find the idea of an industrial park in that area to be an intriguing one.

    This is getting pretty far ahead, but if the region there was rezoned as industrial, and such a commercial park could be constructed there, in the big picture, I don’t see how anyone could possibly see it as a negative thing. The landowners there could be sitting on a potential economic gold mine. Yes, I understand it’s nice to live in a rural setting – there are plenty of of those to go around. From a transportation perspective it’s certainly a good location. The number of good jobs that can be created by such a business park seem like a pretty good thing to me too.

    Obviously it’s important to respect the opinions and rights of the individual land owners, but it’s also important to look at the big picture and have a good plan for how the area (Northfield/Dundas/Faribault) will remain a good place to live, for those who enjoy a rural setting, as well as those who don’t mind a higher population density.

  5. From a cohort in the coal fight who knows how to find things on the web, this info:

    http://www.secinfo.com/d11MXs.v276j.d.htm
    See link for full document but WOW – ‘SEC’ rules might prohibit ABE from advertising but CHECK OUT excerpt below because as of Nov 2006 looks like ABE in the works to sell out to a South Dakota connection!!!! (with the understanding that the ‘Marketing Agreement’ holds) and get this ‘NO PUBLIC ANNOUNCEMENT, which probably would include media marketing of ‘new owners’??— hmmmm The absolute BEST thing would be for us to FIND the original MARKETING AGREEMENT —

    And another very interesting tidbit! ABE in its filings with SEC, reported

    “We will depend on others for sales of our products, which may place us at a competitive disadvantage and reduce profitability…”We expect to hire a third-party marketing firm…” http://www.secinfo.com/dVut2.zfW1.htm?Find=media&Line=969#Line969

    Excerpt from link above
    Section 6.1 Consent; Waiver.
    …..

    (b) By execution and delivery of this Agreement, (i) HGF and Aventine agree that, notwithstanding Section 1.A. of the Ethanol Marketing Agreement by and between HGF and Williams Ethanol Services, Inc. d/b/a Williams Bio-Energy, dated November 30, 2000, including an Amendment effective April 2, 2003 (the “Marketing Agreement”), the Marketing Agreement shall not terminate as a result of the transactions contemplated by this Agreement, but shall remain in full force and effect on and after the Closing Date according to its existing terms and conditions (except for Section 1.A.) until amended or terminated by HGF and/or Aventine, and (ii) Aventine waives any and all rights and claims under Section 1.B. of the Marketing Agreement that may arise from the transactions contemplated by this Agreement.

    Section 6.2 No Public Announcement. None of the parties to this Agreement shall make any public announcement concerning this Agreement, without each other party’s prior written consent (which shall not be unreasonably withheld); provided, however, that any of the parties, but only after reasonable consultation with each other party, may make disclosure if required under applicable law or the rules and regulations of the SEC or any listing agreement with a national securities exchange; and provided further, however, that following execution of this Agreement or consummation of the Closing, ABE may, in its sole discretion, make a public announcement regarding the transactions contemplated by this Agreement and the integration of the HGF’s business into that of ABE.

    YIKES! Click on below link for A SOUTH DAKOTA CONNECTION
    http://www.secinfo.com/d11MXs.v26J5.htm
    Filed by South Dakota Wheat Growers Association

    pursuant to Rule 425 under the

    Securities Act of 1933, as amended

    Subject Company: Advanced BioEnergy, LLC

    Commission File No.: 333-125335

    November 7, 2006

    Dear SDWG Member:

    Your South Dakota Wheat Growers Board of Directors, together with the Board of Managers of Heartland Producers, LLC, has approved an agreement with Advanced BioEnergy, LLC (ABE) to exchange the partnership interests in Heartland Grain Fuels, LP (HGF) held by South Dakota Wheat Growers and Heartland Producers for cash and equity of ABE.

    Under the terms of the transaction, the partners of HGF will receive approximately $16.8 million in cash and approximately 2,631,000 newly issued units of ABE. In addition, HGF intends to make a special distribution to its partners of approximately $8.65 million of earnings prior to the initial closing of the transaction with ABE. Wheat Growers currently owns approximately 48% of HGF and will receive its pro rata share of the consideration from the transaction. In addition, Wheat Growers will continue supplying corn to the HGF facilities.

    ABE is a development-stage company specializing in ethanol production. It currently is building a 100-million gallons per year dry mill corn-processing ethanol plant near Fairmont, Nebraska and has letters of intent to build similar plants in Indiana and Minnesota.

    Wheat Growers Board believes this business relationship with ABE will provide the following benefits to the HGF investors and the agricultural producers in this area:

    a. Heartland Grain Fuels investors will become part of a company with plans to become a larger ethanol producer: By being part of a larger ethanol production company, HGF can achieve additional economies of scale that are difficult to achieve with just two plants in North-Central South Dakota.

    b. Heartland Grain Fuels investors will achieve greater geographic diversity: By being part of ABE which is building plants in other Midwest states, risks associated with drought and marketing should be mitigated.

    c. The transaction will allow Heartland Grain Fuels investors to obtain cash from present operations: Ethanol prices have been at historical highs and this transaction allows HGF to return cash to its investors based on its recent performance.

    d. This transaction will allow Heartland Grain Fuels investors to maintain an investment in an ethanol production company: Heartland Grain Fuels investors will retain their investment in an ethanol production company through the ABE Units they will receive in the transaction.

    e. The transaction will allow Heartland Grain Fuels to maintain business relationships: The planned Aberdeen plant expansion will be completed, and current supply and marketing relationsips will be continued.

    Prior to Heartland Producers’ closing on this business relationship, the transaction must be approved by Heartland Producers’ membership. Wheat Growers’ membership is not required to vote on the business relationship due to Wheat Growers’ cooperative structure and will complete its portion of the transaction prior to the vote by the Heartland Producers members. The Board of Managers of Heartland Producers has passed a resolution requesting Wheat Growers to close on this business relationship prior to the vote of Heartland Producers’ membership.

    With the rapid changes occuring in the ethanol industry, the Wheat Growers’ Board believes this cash and equity exchange will allow the investment of HGF owners to grow beyond just the Huron and Aberdeen facilities, while continuing the local connection of your corn production to ethanol. If you have any questions, please don’t hestitate to contact Dale at 605-225-5500, extension 101 or dlocken@sdwg.com.

    Sincerely,

    Hal Clemensen, SDWG Board President Dale Locken, SDWG Chief Executive Officer

    In connection with the transaction, ABE will file a registration statement that contains an information statement/prospectus with the U.S. Securities and Exchange Commission and relevant state securities regulatory agencies. HEARTLAND PRODUCERS’ MEMBERS AND OTHER INVESTORS AND SECURITY HOLDERS IN ABE AND HGF ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, WHICH WILL CONTAIN INFORMATION ABOUT THE TRANSACTION AND THE MEETING OF THE HEARTLAND PRODUCERS’ MEMBERS THAT WILL BE CALLED TO VOTE ON THIS TRANSACTION, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THIS TRANSACTION. You will also be able to obtain the documents free of charge at the SEC’s web site, http://www.sec.gov, and from ABE on its web site at http://www.advancedbioenergy.com or by contacting Bill Paulsen, at (605) 225-0520.

  6. And here’s more:

    Here’s another link for more on ABE, ABE LLC Northfield including the monumental RISKS with this co. and this project! Bridgewater Township is on the right grack in initiating the 1-year moratorium. The township supervisors then have a chance to do the ‘due diligence’ to protect the township. Check out this 10KSB Fiscal Year End Sept 30th 2006 ‘tell all’ REPORT.

    http://www.sec.gov/Archives/edgar/data/1325740/000110465906084437/a06-26562_110ksb.htm

    The first page or two gives you plenty, then you can use FIND on the tool bar to get to Minnesota stuff, etc.

    Lots of conflict of interest, no experience, little to NO guarantees either from ABE OR the designers, builders AND hints of expenses to come if env. investigation / changes in rules regs occur etc., an opening for future compliance problems and “decommissioning” if plant is abandoned or goes belly up. Seems like at operating plants in Aberdeen and Huron…waste disposal is an issue, not to mention Aberdeen after the expansion will use 500,000 gal daily, Huron 300,000…many of these plants are tied to city water!

    PS — The site is free BUT I had to register and agree to terms before I could get all the documents I wanted. They just gave me a few up front, which enticed me to register…this is GOOD STUFF!!!! Enough here to get people thinking — raises important issues.

  7. Nick,

    Do you live in town? I don’t see you in the phone book. Mark Steil of MPR did a report on how ethanol plants are reviving small raliroads that have no other prospects. I can see how Dave Fellon may be desperate to see that this big fish does not get away. Yet, we are not likely to sacrifice the future of our township to a bad business deal.

    As far as increasing our land values, it is just the opposite. Hoysler realtor did NOT inform my new neighbor of the pending ethanol plant for obvious reasons.

  8. I don’t live in town at the moment, however I grew up on the south end of Circle Lake, and have every intention of moving back to the area when I graduate next spring. If you click the link where my name is on these posts, you’ll be sent to my website where you can learn all you want about where I live.

    The realtor didn’t inform your new neighbor of the pending deal because they’re dishonest. Short term it’s probably not a great deal (especially if you’re wanting the rural lifestyle), long term though (as I said in my previous comment), I see it working out just the opposite.

Leave a Reply