Back

Business Description Hawkeye Holdings Inc. was formed as a Delaware corporation in May 2006, and has not commenced operations and has no significant assets or liabilities. Our business has been conducted through limited liability companies. Hawkeye Holdings, L.L.C.-formerly known as Iowa Falls Ethanol Plant, L.L.C.-was organized in Iowa on October 22, 2003. On February 9, 2005, Hawkeye Holdings, L.L.C. formed a wholly-owned subsidiary, Hawkeye Renewables, LLC, a Delaware limited liability company, to which it transferred substantially all of its assets and liabilities. On June 16, 2006, Hawkeye Holdings, L.L.C. formed Hawkeye Intermediate, LLC. Effective June 30, 2006, Hawkeye Holdings, L.L.C. exchanged its interest in Hawkeye Renewables, LLC for common and preferred ownership interests in Hawkeye Intermediate, LLC. As a result, Hawkeye Intermediate, LLC became a new intermediate holding company of Hawkeye Renewables, LLC, which operates our business. Prior to the effective date of this offering, we will implement a new holding company structure in which Hawkeye Renewables, LLC will become our indirect wholly-owned limited liability company subsidiary and our current owners will exchange their interests in our business for common and redeemable preferred stock of Hawkeye Holdings Inc. We are the third largest ethanol producer in the United States based on production capacity as reported by the Renewable Fuels Association-RFA. We believe that our access to low-cost corn supplies, approach to marketing our ethanol, operating scale, transportation infrastructure and operational expertise allow us to be one of the lowest-cost producers of ethanol in the United States. We own two of the largest ethanol production facilities in the United States and we are capable of producing aggregate ethanol output of approximately 215 MMGPY. Our Iowa Falls plant began operations in November 2004 and expanded to its current production capacity of 100 MMGPY in March 2006. Our Fairbank plant began operations in May 2006, and now has 115 MMGPY of production capacity. In addition to producing ethanol, we produce and sell distillers grains as ethanol co-products, which serve to offset a portion of our corn costs. We intend to expand our production capacity by approximately another 330 MMGPY over the next few years, by breaking ground on our third plant by October 2006, our fourth plant by March 2007, and our fifth plant in the second quarter of 2007, which will bring our total production capacity to approximately 545 MMGPY. For the year ended December 31, 2005, we generated revenue of $89.1 million, net income of $8.6 million and EBITDA of $26.1 million, and we sold 48.3 million gallons of ethanol at an average price per gallon of $1.65. For the six months ended June 30, 2006, we generated revenue of $94.6 million, net income of $1.5 million and EBITDA of $19.8 million, and we sold 44.4 million gallons of ethanol at an average price per gallon of $1.94. We have sold forward approximately 81 million gallons of ethanol (which represents 37.7% of our estimated annual ethanol production of approximately 215 million gallons for the 12-month period ending June 30, 2007) at an average price of $2.09 per gallon. The table below provides an overview of our ethanol plants that are in operation as of September 2006. Iowa Falls plant Fairbank plant Location Iowa Falls, Iowa Fairbank, Iowa Date of completion November 2004 May 2006 (expansion March 2006) Annual ethanol production capacity (in millions of gallons) 100 115 Ownership 100% 100% Production process Dry-Milling Dry-Milling Primary energy source Natural Gas Natural Gas Estimated distillers grains production (dry equivalents) per year 315,000 tons 360,000 tons Estimated corn processed per year 36 million bushels 41 million bushels Corn grown during 2004-2005 crop year within a 60-mile radius 569 million bushels 466 million bushels º In 2005, we secured the right to acquire four well-located sites in Iowa, upon three of which we intend to build the Menlo, Ogden and Shell Rock plants. In July 2006, we completed our acquisition of the site located in Menlo, Iowa. The sites are each approximately 100 acres and we believe are located in prime areas in Iowa for the construction of ethanol plants. º In July 2006, we signed a letter of intent with AECom, a global project design and management company, to build six plants, including the Menlo, Ogden and Shell Rock plants, using technology from Delta-T, an ethanol technology provider. The letter of intent is subject to our entering into a definitive binding agreement and contemplates building up to six 110 MMGPY plants over the next four to five years which, if all six plants were built, would bring our total capacity to approximately 875 MMGPY. Each plant is expected to take approximately 18 months to construct and is expected to cost approximately $1.25-$1.50 per gallon of capacity. The table below provides an overview of our plans to construct additional ethanol plants over the next few years. Menlo plant Ogden plant Shell Rock plant Expected location Near Menlo, Iowa Near Ogden, Iowa Near Shell Rock, Iowa Expected commencement of construction October 2006 March 2007 June 2007 Estimated time to completion 18 months 18 months 18 months Estimated annual ethanol production capacity (in millions of gallons) 110 110 110 Expected ownership 100% 100% 100% Production process Dry-Milling Dry-Milling Dry-Milling Plant designer (anticipated) Delta-T Delta-T Delta-T Plant builder (anticipated) AECom AECom AECom We have begun seeking the necessary permits and zoning approvals for the Menlo and Ogden sites, have received zoning approval and county real estate tax abatement for the Menlo site and have commenced discussions relating to the design and construction of the first of these plants with AECom and Delta-T, subject to entering into a definitive binding agreement with them. We plan to finance the costs of design and construction of the Menlo, Ogden and Shell Rock plants using a portion of the proceeds of this offering, our excess cash flow and the proceeds of the issuance of additional debt or equity. We cannot assure you that we will be successful in financing or constructing any new facilities. ------ Hawkeye Holdings Inc. was formed as a Delaware corporation in May 2006. Our business previously has been conducted through limited liability companies. Hawkeye Holdings, L.L.C.—formerly known as Iowa Falls Ethanol Plant, L.L.C.—was organized in Iowa on October 22, 2003. On February 9, 2005, Hawkeye Holdings, L.L.C. formed a wholly-owned subsidiary, Hawkeye Renewables, LLC, a Delaware limited liability company, and transferred substantially all of its assets and liabilities to the newly formed operating company. Our principal executive offices are located at 21050 140th Street, Iowa Falls, IA 50126. Our telephone number is (641) 648-8910. Our website address is www.hawkrenew.com.