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Note 16 - Risks And Uncertainties
6 Months Ended
Dec. 31, 2011
Minimum Guarantees, Net Amount at Risk Disclosure [Text Block]
NOTE 16:                      RISKS AND UNCERTAINTIES

Commodities risk.  Commodity prices for certain raw materials used by the Company and prices for natural gas are subject to significant volatility.  Grain and flour costs are a significant portion of the Company’s costs of goods sold, and historically the cost of such raw materials is subject to substantial fluctuations, depending upon a number of factors over which the Company has no control, including crop conditions, weather, government programs and purchases by foreign governments.  Such variations in costs have had and may continue to have, from time to time, significant effects on the results of the Company’s operations.  The Company expects to only purchase derivatives and enter contracts for future delivery only to protect margins on contracted, and a portion of spot market, alcohol sales and expected ingredients sales. Management attempts to recover higher commodity costs experienced through higher sales prices, but market considerations may not always permit this, and even where prices can be adjusted, there would likely be a lag between when the Company incurred higher commodity and natural gas costs and when the Company might be able to increase prices.  To the extent the Company does not enter such derivative contracts or contracts for future delivery and is also unable to timely pass increases in the costs of raw materials to customers under sales contracts, the Company may be adversely impacted by market fluctuations in the cost of grain and natural gas, particularly when such fluctuations are volatile.

Credit Agreement.  The Company entered into its Credit Agreement (amended in October 2011), as more fully discussed in Note 4.  Corporate Borrowings and Capital Lease Obligations.   The Credit Agreement permits the lender to modify or reduce the borrowing base at the lender’s reasonable discretion and to accelerate our debt if an over-advance results.   Any modification to reduce our borrowing base or terminate the Credit Agreement would negatively impact our overall liquidity and may require us to take other actions to preserve any remaining liquidity.  Acceleration of debt under our Credit Agreement could result in acceleration of our other debt obligations discussed in Note 4. Corporate Borrowings and Capital Lease Obligations. 

Acquisition of LDI’s Distillery Business.  The LDI acquisition involves operating risks such as the ability to assimilate LDI into the Company’s current business, the risk of entering a new product market, the possibility that the debt incurred for the acquisition proves to be more of a burden than the Company expected, the risk that acquired Distillery Business of LDI does not perform to increase Company profits, and the risk that effective internal controls are not established related to the Indiana Distillery.

ICP.  The Limited Liability Company Agreement gives either member certain rights to shut down the plant if it operates at a loss.  Such rights are conditional in certain instances but absolute if EBITDA losses aggregate $1,500 over any three consecutive quarters or if ICP's net working capital is less than $2,500. For the three consecutive quarters ending both September 30, 2011 and June 30, 2011, ICP experienced an EBITDA loss in excess of the $1,500 aggregate loss threshold amount permitted over any three consecutive quarters; however, both partners have agreed to waive rights related to EBITDA losses through September 30, 2011.   ICP Holdings also has the right to shut down the plant if ICP is in default under its loan agreement for failure to pay principal or interest for two months.

An affiliate (sister company) of SEACOR Energy, Inc. has provided funding to ICP through two loans secured by all of the assets of ICP, including the Pekin Plant. Among other matters, losses or working capital deficiencies that would entitle a member of ICP to shut down the plant are events of default under these loan agreements which, upon any requisite notice and/or lapse of time, would entitle the lender to exercise its remedies, including foreclosing on ICP’s assets and, in the case of the working capital deficiency or successive losses, enforcing the plant closure provisions in the Limited Liability Company Agreement referred to above. These provisions relate to ICP having quarterly EBITDA losses that exceed $500, EBITDA losses in three consecutive fiscal quarters equaling or exceeding $1,500 in the aggregate or net working capital of less than $2,500. During the transition period ended December 31, 2011, ICP experienced EBIDTA losses in excess of the monthly and quarterly EBITDA thresholds in the quarter ended September 30, 2011.  An affiliate (sister company) of SEACOR Energy, Inc. permanently waived rights for covenant violations related to these EBITDA losses through September 30, 2011.

If ICP's lender were to foreclose on ICP's assets or force a closure of the Pekin plant, the Company could be forced to purchase alcohol from third parties at unfavorable prices in order to satisfy contractual commitments to customers, our sales could be reduced and the value of our investment in ICP could be impaired.

Workforce subject to collective bargaining.  As of December 31, 2011, the Company had 256 employees, 97 of whom are covered by collective bargaining agreements with one labor union.  The agreement, which expires on August 31, 2014, covers employees at the Atchison Plant.  As of June 30, 2011 and 2010, the Company had 192 and 193 employees, respectively.