By Tom Kelly
Editor and Publisher

Vanguard Synfuels L.L.C., the first operational synthetic fuel manufacturer in Louisiana, has been purchased by a Los Angeles venture firm which has announced plans to expand biodiesel production at Vanguard to 20 million gallons per year.

Diametrics Medical, Inc., a former maker of medical devices, acquired Venguard for $17.7 million in cash, and 4,300 shares of preferred stock that will be convertible into approximately 20 percent of the company's equity.

The Vanguard acquisition marks the first step in the Company's long-term strategy to build and acquire biodiesel production facilities.

The Louisiana facility, which is capable of producing up to 12 million gallons of biodiesel fuel per year, will be developed to expand capacity to 20 million gallons.

Vanguard's Chief Executive Officer, 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."

Vanguard Synfuels was organized in 2003 by a group of 24 investors, all of whom have connections to the forest industry, to acquire the shut-down fertilizer planbt from Farmland Industries, Inc. of Missouri. The plant manufactured ammonnium nitrate fertilizer from natural gas, and was closed after gas prices rose. The forestry group had intentions of manjufacturing synthetic diesel from wood chips. However, the process has not proved commercial viable, and the firm turned instead to making biodiesel from soybean oil.

With growing interest in synthetic fuels, the California-based company made the move to acquire Vanguard and enter into long-range construction and operation of biofuels in the Gulf Coast area.

In commenting on the sale, Dubroc said, "The original founders of the company deserve recognition for their courage in their investment to develop a source for alternate fuels in Louisiana."

Board members of Vanguard, Travis Taylor, Dean Tyler, Steve Templin, Bill Wieger, Jimmy Carter, Glenn Davis, Tim Collins, and other stockholders who were not named, sold their interest and will not be a part of the new company, except through possible reinvestment when a public offering of stock is made.

Dubroc said the present working staff of Vanguard will continue under the new ownership, and additional staff hires are anticipated as the company increases its output.

To finance the acquisition, Diametrics completed a $28.5 million private placement of its Series J Convertible Preferred Stock.

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 In connection with the acquisition, Diametrics is also repaying $800,000 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 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 Chief Executive Officer, 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.

Mr. 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.

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. Diametrics will change its corporate name to reflect its focus on the construction and acquisition of biodiesel production facilities, and will be publicly tradedunder the new name, which has not been announced.

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