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8-K - FORM 8-K - Western Dubuque Biodiesel, LLC | c16001e8vk.htm |
Exhibit 99.1
April 25, 2011
Dear Western Dubuque Biodiesel Member,
Western Dubuque Biodiesels Board of Directors has considered deregistering the company as a public
company with the Securities and Exchange Commission (SEC) for some time. The Board believes
deregistration would benefit Western Dubuque Biodiesel and its members for several reasons,
particularly considering current difficult economic conditions:
| Deregistration will save a significant amount of money. Western Dubuque Biodiesels
annual cost of SEC compliance and reporting is currently estimated at $250,000 per year,
and continues to increase due to changing and stricter regulations. |
||
| Deregistration will reduce the time and resources that our Board, management and
employees currently spend complying with SEC-reporting requirements. |
||
| As an SEC-reporting company, Western Dubuque Biodiesel must report significant
information to the public. This information becomes available to our competitors, who may
use it for their own benefit. Moreover, potential business partners are sometimes more
hesitant to enter into contracts with the company if they know that negotiations might be
disclosed. Deregistration will help to protect such sensitive information about our
operations and business strategies. |
All members will have the opportunity to vote on the decision to deregister. We will hold a special
member meeting this fall. Before the meeting, you will receive a proxy statement announcing the
meeting date and location and explaining the proposed amendments to the companys operating
agreement needed for the deregistration. For the proposed amendments to be adopted, at least a
majority of the members represented in person or by proxy at the meeting must approve them.
Companies are required to register with the SEC when they have a class of securities that is held
by a certain number of stockholders. To deregister, Western Dubuque Biodiesel would reclassify its
units to divide the members between different classes of units so there is no class with enough
holders to require the company to be a reporting company.
The company has issued a total of 29,779 units, all of the same class, owned by 579 members. After
much discussion and thought, the Board met on March 28, 2011 and approved the reclassification of
the companys units into the following three classes, subject to member approval. Information about
the current number of members and units for each proposed class is also included, but these numbers
may change if there are any unit transfers between the date of this letter and the member meeting.
904 Jamesmeier Road P.O. Box 82 Farley, IA 52046 563-744-3554
Proposed Class | Units Owned | Number of Members | Number of Units | |||||||||
Class A |
50 or more | 215 members | 20,456 units | |||||||||
Class B |
25 to less than 50 | 335 members | 9,041 units | |||||||||
Class C |
Less than 25 | 29 members | 282 units |
For the classes to count separately for counting members toward the SEC-reporting threshold, they
have to be meaningfully different. The proposed differences between the classes will be voting
rights. If the reclassification is approved, we expect that the Class A unit holders would be
entitled to vote on operating agreement amendments, director elections, voluntary dissolution of
the company, mergers, and all other matters for which unit holder approval is required under the
companys operating agreement or state law. Class B unit holders would be entitled to vote on
director elections, mergers and voluntary dissolution. Class C unit holders would be entitled to
vote only on mergers and voluntary dissolution.
There will be no economic difference between the classes. All three classes would have identical
rights with regard to distributions, allocation of profits and losses, liquidation, and transfer of
units. In other words, if there are any future member distributions, each unit would receive its
equal portion, regardless of class. If the members approve the proposed reclassification, unit
holders will receive new membership unit certificates to replace certificates currently held by
unit holders of record.
There will be a 60-day window ending June 27, 2011 for unit transfers before the proposed
reclassification (unless extended by the Board, in which case you will receive notice). The purpose
of this trading window is to allow unit holders the opportunity to make transfers before the
reclassification to acquire the requisite number of units to be in their desired class. The total
number of units a member holds at the time of reclassification will determine the class to which
the units held by that member will be assigned. In some cases, members may desire to combine unit
ownership to meet the threshold to be assigned to a different class, such as spouses that now own
units separately combining their units. However, if members form business entities to combine
units, the Board anticipates that following the deregistration it will not allow such
entities to dissolve and distribute units to the extent the companys operating agreement allows
the Board to do so. We encourage you to speak with your legal and tax advisors to determine whether
combining unit ownership may be advantageous in your particular situation.
If you wish to buy, sell, or otherwise request a transfer of units on the Qualified Matching
Service (QMS) located on the companys website, contact the company at (563) 744-3554 ext. 203 or
email tom.brooks@wdbiodiesel.net. Beginning June 27, 2011 (or a later date, if extended by the
Board), unit transfers and QMS trading will be halted until further notice. The Board is currently
considering whether the company will continue the QMS once the deregistration process is complete,
as well as what alternatives to the QMS may be available.
904 Jamesmeier Road P.O. Box 82 Farley, IA 52046 563-744-3554
If the members approve the reclassification, the Board and management intend to continue to provide
Western Dubuque Biodiesels members with financial information on a regular basis as well as to
continue to distribute newsletters. The company will also continue to provide members with audited
financial statements. We anticipate that future correspondence to our members will be at least as
informative as the information we currently provide, and may be even more
meaningful because we will not be restricted by SEC regulations as to what we may or may not
disclose, and we will be less sensitive to the possibility of public disclosure.
On behalf of the Board of Western Dubuque Biodiesel, we thank all of our members for your support.
If you have any questions regarding this process, please contact the company at (563) 744-3554 ext.
203 or email tom.brooks@wdbiodiesel.net.
We would also like to pass on updates and info to you, on a more regular basis. Please send us
your email information so we can keep you more informed while minimizing the cost of postage and
printing.
Sincerely,
Western Dubuque Biodiesel, LLC
Western Dubuque Biodiesel, LLC
/s/ William Schueller
William Schueller, Chairman of the Board
This letter is not a proxy statement or a solicitation of proxies from the holders of the
Companys membership units. Any solicitation of proxies will be made only by the Companys
definitive proxy statement, when available. Members are urged to read the proxy statement and it
appendices, when available, because they will contain important information about the Company and
the proposed reclassification of membership units.
This letter contains historical information, as well as forward-looking statements that involve
known and unknown risks and relate to future events, our future financial performance, or our
expected future operations and actions. These forward-looking statements are only our predictions
based upon current information and involve numerous assumptions, risks and uncertainties. Our
actual results or actions may differ materially from these forward-looking statements for many
reasons, including the reasons described in our filings with the Securities and Exchange
Commission. We caution you not to put undue reliance on any forward-looking statements, which speak
only as of the date of this letter. We qualify all of our forward-looking statements by these
cautionary statements.
904 Jamesmeier Road P.O. Box 82 Farley, IA 52046 563-744-3554