5/13/2009 Ownership of biodiesel plants consolidated
WALL LAKE - Western Iowa Energy has entered into an agreement with Renewable Energy Group for consolidation and operation of its 30-million-gallon-per-year biodiesel plant at Wall Lake.
Central Iowa Energy, which has a 30-million-gallon biodiesel plant at Newton, and Blackhawk Biofuels, which has a 45-million-gallon plant at Danville, Ill., are also involved in the transaction.
Ownership of all four companies is being consolidated into a new holding company called Renewable Energy Group Inc. The new company will be owned by current REG investors and owners of the three acquired companies, including the more than 500 investors in Western Iowa Energy.
The transaction is expected to be complete this summer and is subject to approval by shareholders and members of all four companies as well as regulatory approvals.
"The consolidation is expected to allow the combined entity to better position itself to meet anticipated demand from the petroleum industry's distillate fuel market," REG said in a press release.
Bill Horan, chairman of the Western Iowa Energy board of directors, said, "Although our facility is currently well-positioned compared to other biodiesel manufacturers in the U.S. due to its ability to process multiple feedstocks, this proposed consolidation offers our members the opportunity to diversify their biodiesel investments while continuing and expanding our current relationship with REG."
"Western Iowa Energy's board has carefully considered the future of our facility and believes the REG consolidation proposal is the best direction for returning value to our members."
"As an Iowa company with more than a decade of biodiesel production experience, we look to continue the vision for Western Iowa Energy's facility to spur rural economic development and support the local economy by being good business partners and neighbors," said Daniel Oh, president and chief operating officer for REG.
Chairman and chief executive officer Jeff Stroburg said demand by major petroleum distributors and oil refiners was a key factor in the decision to move forward with plant consolidation.
"As the Renewable Fuels Standard takes effect and our nation moves toward energy reform, the distillate market is demanding technical expertise, dependable supply, more efficient distribution and creative pricing options from major biodiesel partners," Stroburg said.
The Renewable Fuels Standard calls for 500 million gallons of domestic biodiesel consumption ramping up to one billion biodiesel gallons in 2012.
"We believe this proposed consolidation brings greater economies of scale, streamlined central management of complex logistics and decisionmaking processes, and enhanced risk-management opportunities," Oh added. "By more efficiently managing our business and strengthening distribution channels, REG will continue to partner with obligated parties of the RFS in order to reduce our nation's reliance on foreign oil."
