03 May 2013 18:41 [Source: ICIS news]
MEDELLIN, Colombia (ICIS) --Renewable Energy Group (REG), a large US biodiesel producer and marketer, plans to acquire a 30m gal/year (114m litres/year) biodiesel plant in Mason City, Iowa from Soy Energy, REG announced on Friday.
The acquisition is subject to customary closing conditions, including approval of the transaction by the owners of Soy Energy.
REG will buy the biorefinery for $11m (€8.5m) in cash and the issuance of a $5.6m promissory note to Soy Energy, according to REG.
"Renewable Energy Group's offer provides the best value for Soy Energy unit holders while helping unit holders achieve their mission for promoting economic development in the area," said Jeff Oestmann, Soy Energy's chief executive. "In addition, REG's procurement know-how and proven business model of using lower-cost raw materials makes them a reliable operator for this plant."
The Mason City plant, originally built to process highly refined raw materials in 2006, was purchased by Soy Energy in 2010 and upgraded to utilise a larger variety of raw materials including animal fats and used cooking oil.
The plant was idled in mid-2012 due to market conditions and manufacturing challenges.
REG plans to restart the refinery and further upgrade the plant.
The acquisition would increase REG's biodiesel production capacity to 257m gal/year.
REG currently owns seven active biodiesel refineries in five states, including nearby plants in Newton and Ralston, Iowa; and Albert Lea, Minnesota.
"We are committed to the people of Mason City, Midwestern farmers and livestock producers and those who supply the fats, oils and greases we will buy," said Daniel Oh, REG chief executive. "We look forward to working with area transportation firms to power our logistics and to providing new employment opportunities at the Mason City facility."
Biodiesel is an alternative fuel produced from renewable resources. The most commonly used feedstocks are rapeseed, soy and palm oil.
($1 = €0.77)
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