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inability to secure the funds needed to construct a full-scale
commercial plant in 1997 was due to the October 1996 decision by
Deutsche Bank to renege on a “handshake deal” between Solv-Ex and
a subsidiary of Deutsche Bank (made before the latter’s
acquisition of the subsidiary) whereby Solv-Ex was to receive
$100 million of financing in January 1997.
Construction of the initial stage plant began in August
1996, and with the testing of the plant’s operation in March
1997, was then complete. The plant produced 600 gallons of good-
quality oil during a 12-hour period on March 31, 1997, thereby
demonstrating the viability of Solv-Ex’s oil extraction process.
1997 Efforts To Complete the Initial Stage Oil Recovery Plant
In early 1997, still intent on completing the initial stage
plant,5 Mr. Rendall pursued alternative financing for Solv-Ex.
On March 26, 1997, Mr. Rendall made a $2 million loan to Solv-Ex
(the $2 million loan) from funds borrowed from Merrill Lynch,
Pierce, Fenner & Smith, Inc. (Merrill Lynch) through Mr.
Rendall’s Merrill Lynch margin account6. The $2 million loan
(which, in form, constituted a $2 million wire transfer from
Merrill Lynch to Solv-Ex’s bank account) increased Mr. Rendall’s
5 Plant modifications were necessary in order to enable the
plant to run continuously.
6 Mr. Rendall established that account on Mar. 20, 1997, by
transferring his existing Smith Barney & Co. margin account to
Merrill Lynch.
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