DALLAS, TX -- In two announcements today, Southridge Enterprises Inc. said it has retained legal counsel to pursue damages in relations to a failed equipment purchase, while planning to buy ethanol from Brazil in the meantime.



Southridge retained a New York law firm to pursue a claim for damages in relation to a failed equipment purchase by is subsidiary, Southridge Ethanol Inc. The equipment would have been used for establishing an early-stage ethanol production capacity at the Sledge, Miss., plant.



The company said it entered into a purchase arrangement with ethanol equipment sellers South Louisiana Ethanol LLC, whereby it was represented that there were no contractual arrangements with any other buyers, and that the equipment was not subject to any outstanding liens or encumbrances.



Subsequently, Southridge was notified by another would-be purchaser, Earth Biofuels Inc., which claimed to have signed an earlier agreement with South Louisiana Ethanol, LLC for the same equipment. Litigation was threatened by Earth Biofuels Inc. and, accordingly, Southridge chose not to close on the equipment purchase.



Alex Smid, President of Southridge Ethanol, Inc., said, "We intend to seek damages to rectify the unfortunate circumstance respecting South Louisiana Ethanol LLC and Earth Biofuels; however, Southridge has also commenced initiatives to mitigate our damages and we are confident that, in the long run, the negative impact will be minimized."



Buying ethanol from Brazil



Southridge Ethanol has signed a letter of intent to purchase ethanol from PLS Solucoes Ltd., a major Brazilian ethanol production company.



Under the terms of this agreement, Southridge can purchase up to 50,000,000 gallons of ethanol per year for sale and distribution in the United States.



The ethanol will be shipped from the port of Santos, Brazil, directly to a port on the Mississippi River that is in close proximity to the Southridge facility in Sledge, Miss.



By negotiating with a company like PLS Solucoes, Southridge is positioning itself to launch its sales initiatives and establish its distribution channels. Southridge is in negotiations with several U.S.-based buyers that will commit to take delivery of its ethanol.



Smid said, "During the period of our ethanol plant construction, we will be active in generating immediate revenue streams for Southridge, thus building shareholder value at an earlier stage than might otherwise be possible."



Southridge Enterprises, headquartered in Dallas, is a renewable energy company with a mission to become the ethanol producer of choice in the southeastern U.S. The company is focusing its efforts in an area which offers abundant supplies of corn, superior transportation infrastructure and expedited permitting processes. The Company is actively acquiring and developing ethanol production facilities and anticipates start-up of the first phase of these operations in 2007.



SOURCE: Southridge Enterprises Inc. via PR Newswire.