MIPCO faces eviction in Houston, questions elsewhere

HOUSTON – A controversial biodiesel manufacturing plant is poised for eviction, and two of the company’s other facilities are yet to achieve their advertised potential.
Mississippi Investment Petroleum Co., known as MIPCO, missed its December rent with Sen. Jack Gordon of Okolona and he’ll push to remove them from his Houston facility in a Jan. 7 justice court hearing in Chickasaw County.
“I’m not satisfied with what’s happened there,” Gordon said Friday.
MIPCO’s likely ejection from the plant in Houston’s industrial park, north of town, marks a second failed effort in 2009 by CEO Jon Lunsford of Lilburn, Ga.
Earlier this year, he announced plans to construct a biofuel manufacturing plant at the Port of Aberdeen, but as questions mounted, support dwindled and MIPCO moved to Houston.
MIPCO reportedly agreed to pay Gordon $10,000 per month to lease the building, which previously housed Tri States Petroleum. Tri States was managed by Matthew Gibson of Okolona before Gordon assumed that role in May 2008.
A visit to the MIPCO plant Friday found the gate closed but not locked, and no one around, although no eviction notice was posted on the door. Two weeks ago Lunsford called off a scheduled tour by the Daily Journal.
Lynne Taylor, Chickasaw County Justice Court clerk, confirmed that the “removal of tenant” notice was served Dec. 16 for Constable Billy Voyles and signed at the plant by Scott Cotsmire.
Public records and MIPCO news reports show Lunsford and partner Mike Cook of Madison aimed to make biofuel from chicken fat in Aberdeen and Houston.
Other reports claim MIPCO has a lease agreement on a defunct facility in Nettleton.

Coming ‘this fall’
MIPCO launched its biodiesel plans early in 2009 for an Aberdeen Port facility.
As reported in the Daily Journal in May, Lunsford agreed to hold off construction on the Aberdeen plant until the city got a road improvement grant.
That grant never received approval from the Mississippi Development Authority, so Lunsford moved the operation to Gordon’s facility in Houston.
In August, Biodiesel Magazine reported completion of “commissioning” at the Houston plant. Lunsford said, in the article, he was waiting for the fuel to meet federal standards before starting production.
By this time, Lunsford was not answering calls from the Daily Journal.
As late as October, Biodiesel quoted Lunsford as saying the company expected to begin construction in Aberdeen “this fall.”
Just weeks earlier, the Mississippi Department of Environmental Quality began receiving permit applications for the Aberdeen plant.
Last week, DEQ spokesman Robbie Wilbur said the applications are under review with permits being drafted. Whether MIPCO will go ahead in Aberdeen isn’t clear.
No contact information is known for Cook, but Lunsford did not answer a phone call and an e-mail asking for comment.
Sharon Christian, who answers a local phone number for MIPCO, said she doesn’t know anything about an eviction notice and referred all questions to Lunsford.
Phone calls to the Houston facility went unanswered Friday.
Gordon said he believes the company actually made some fuel in Houston, but how much or for whom, he didn’t know.
Mark Leggett, executive director of the Mississippi Poultry Association, said he isn’t aware that any of his members provide chicken fat to MIPCO.
He also said he doesn’t believe there’s enough spare chicken fat in the entire state to run an operation seeking to produce millions of gallons of fuel per year.
He said the bulk of fat coming out of the processing phase is recycled back into chicken feed, which makes it more affordable.
Lunsford, whose home and business have the same address, with Cook also runs Integrated Solutions USA LLC, chartered on Georgia on April 23. Biodiesel Magazine says he’s worked in the computer industry for 20 years. Cook is described as “in the medical equipment industry.”
“I was interested in renewable energy and with my partner in Mississippi got involved with others in the biodiesel industry,” he told the magazine.
A computer programming business, Excalibur Systems, also uses Lunsford’s home address. It was founded in 1996, and according to www.cortera.com, has sales under $500,000 a year with one to five employees. Lunsford is listed as its president.

What about Nettleton?
As for MIPCO’s plans to operate in Nettleton, the plant looked idle Friday, much as it has for months. The telephone number listed on its owner’s Web site and federal filings is disconnected.
The facility itself has had a rough go the past few years.
Biodiesel of Mississippi Inc. lost it in a 2007 bankruptcy; then it was bought by Universal Bioenergy Inc.
In an Aug. 9, 2009, filing with the U.S. Securities & Exchange Commission, Universal announced a long-term lease agreement with MIPCO for $250,000 per month.
It said it expected the plant to be in “partial operation” within 60 days from Sept. 1, with full operating capacity of 1 million gallons per month “shortly thereafter.”
That report was filed by Michael Ator, Universal’s new chief financial officer.
Friday, Universal’s CEO Dr. Richard Craven of Laurel referred Daily Journal questions to the company’s investment relations officer, who was unavailable for comment.
Two months before the lease announcement, Universal Treasurer and CFO James Michael Ator estimated in an SEC filing the plant’s gross revenue at $34 million minus raw materials and other operating costs of $29 million, leaving a gross profit of $5 million per year.
After some other operation calculations, he set the plant’s market value at $13 million.
Biodiesel Magazine reported the deal Aug. 25, saying Lunsford expected the Nettleton plant to begin operating within 60 days of closing.
That was an interesting day for Universal’s publicly traded stock (UBRG). Until then, it had been selling for 3-6 cents a share. On Aug. 25, it jumped to 32 cents with a volume of about 6.8 million shares.
At the end of business Friday, Universal’s publicly traded stock, closed at 81⁄2 cents per share.

Universal’s issues
In October, published reports continued to say that MIPCO planned to expand the Nettleton facility, to use poultry fat and waste vegetable oil to make its products.
Last week, Universal’s company leadership met in Las Vegas to restructure the company and make long-term plans to “take advantage of emerging global energy market opportunities,” said a news release on www.pinksheets.com, which trades its stock.
“We’re no longer just about biofuels alone,” the article stated. “We intend to be a vertically integrated company … to build the company into a prominent player in alternative green energy industry.”
Universal had been under strong financial stresses, reports show. In the first quarter of 2008, an SEC report by Universal says, “The company has no revenues which make it difficult to forecast our future results.”
An audit dated April 10, 2008, by Webb & Co. P.A. of Boynton Beach, Fla., stated the company – “in the development stage” – had a deficit of $984,328, raising “substantial doubt” about its ability to continue “as a going concern.”
An Oct. 30 announcement by Universal said the company “received a preliminary multimillion-dollar investment commitment from a private investment consortium to provide funding to the company for its future growth and expansion.”
A new management team also said it believed a new business strategy should bring them a significant return on their investment. The stock gained about 4 cents per share that day.
“Universal Bioenergy’s management believes this will allow them to meet the needs of several potential long-term biofuel orders in the 80 to 100 million gallon range that their new marketing team is working on,” the company-released news said.
As for the Nettleton facility, DEQ’s Wilbur said it does not have the agency’s permission to operate “on any basis,” although in 2008 it was granted 60 days to conduct trial operations to get wastewater samples for analysis.
“The time period expired before Universal commenced the approved schedule of operations,” Wilbur noted.
Universal’s Web site described this interim operation as permits “to begin trial batch processing” to confirm its refinery process and to “characterize the waste byproducts that would be produced.”
And the SEC is mum on whether that Aug. 25 stock trading day meant anything besides business.
“The SEC cannot comment on anything short of litigation,” a spokesman said Friday.

Contact Patsy R. Brumfield at (662) 678-1596 or patsy.brumfield@djournal.com.

Patsy R. Brumfied/NEMS Daily Journal