BOISE – Agri Beef Co. has reached a tentative agreement that would settle an $8.1 million lawsuit against a California-based biofuels producer, according to local news reports.

Agri Beef filed a breach of contract lawsuit July 12 against Watsonville, Calif.-based R. Power Biofuels regarding a loan Agri Beef made to North Star Biofuels, a joint venture between R. Power and AB Bioenergy, an Agri Beef subsidiary. Agri Beef made the loan to North Star to finance construction on a new plant in Watsonville. North Star was overdue paying the loan because of malfunctioning equipment.

Both companies now expect the lawsuit to be dismissed after they reached a tentative agreement to restructure the loan.

The new facility, which was to be completed by April, has a production capacity of 40,000 gallons of biodiesel per day. North Star Biofuels manufactures biodiesel from animal fats and other raw materials used in the biodiesel industry, according to the company's web site.

Agri Beef is a vertically integrated beef producer and processor that sells products under several brands, including Snake River Farms and Double R Ranch.