LOS ANGELES -- Diametrics Medical Inc. has acquired Vanguard Synfuels L.L.C., which owns and operates a 12-million-gallon-per-year biodiesel production facility in Pollock, La.



Diametrics acquired Vanguard for $17.7 million in cash and 4,300 shares of its Series K Convertible Preferred Stock that will be convertible into approximately 20% of the Company's equity (excluding warrants and stock options). In connection with the acquisition, Diametrics is also repaying $0.8 million of Vanguard's shareholder loans, and providing a corporate guaranty for Vanguard's $3.5 million of outstanding debt.



To finance the acquisition, Diametrics completed a $28.5 million private placement of its Series J Convertible Preferred Stock. The Series J Convertible Preferred Stock will be convertible into common stock at a conversion price of $0.76 per common share. M.A.G. Capital, LLC, a Los Angeles-based private investment firm, was the lead investor in the Series J financing, which included other institutions and accredited investors.



"Yesterday's acquisition marks the first step in our long-term strategy to build and acquire biodiesel production facilities," said Diametrics CEO, Bruce Comer. "We are excited about the prospects of biodiesel playing a larger role in the overall diesel market. In 2005, biodiesel represented only 75 million gallons of the 60 billion gallon United States diesel market," said Comer.



Comer cited a favorable regulatory environment for biodiesel that currently includes federal and state tax incentives and state usage mandates (including Louisiana, Minnesota, Washington and Illinois), as well as certain environmental benefits from the use of biodiesel when compared with petrodiesel.



"Our goal is to become a significant force in this rapidly growing market for biodiesel, where we can help reduce our nation's reliance on foreign oil imports while creating long-term value for our shareholders," Comer said.



Vanguard's CEO, Darrell Dubroc, will become president and chief operating officer and a director of Diametrics. A long-time energy industry executive, Dubroc is among the pioneers of the biodiesel industry in the United States and a voting board member of the National Biodiesel Board.



"We started production of biodiesel in April 2006 and our facility is capable of producing up to 12 million gallons per year," said Dubroc. "We plan to expand the Pollock facility's annual capacity to 20 million gallons." Dubroc noted, "our company's focus is exclusively on biodiesel fuel made from renewable, agricultural-based feedstocks, primarily soybean oil, but potentially from other vegetables oils and animal fats."



Prior to the acquisition of Vanguard, Diametrics had limited assets and liabilities and no operations, and was treated as a "shell company" by the Securities and Exchange Commission. It had previously been a maker of medical devices. Its business activities were discontinued by the second quarter of 2005, and substantially all remaining assets were sold.



The company plans to submit a shareholder proposal to reincorporate in the State of Delaware. In connection with such reincorporation, Diametrics will change its corporate name to reflect its focus on the construction and acquisition of biodiesel production facilities.



M.A.G. Capital, LLC, through its managed funds, provides growth equity capital to small-cap and micro-cap public companies across a wide range of industries.



SOURCE: Diametrics Medical Inc. via PR Newswire.