REG postpones biodiesel IPO amid US share slump

24 March 2008 23:15  [Source: ICIS news]

HOUSTON (ICIS news)--US biodiesel producer Renewable Energy Group (REG) has withdrawn its planned $150m (€98m) initial public offering (IPO) due to the weakness in the share market, chief financial officer Jeff Pattison said on Monday.

The move was disclosed when REG withdrew a so-called S-1 notice for the sales of shares that was lodged with the US Securities and Exchange Commission in July 2007.

"By pulling our S-1 filing, REG adds flexibility to the way in which it can strategically grow the business," Pattison said.

"We're very optimistic about REG's future and the biodiesel industry's future, yet current market conditions require us to think differently," he said.

The company has not disclosed its plans for future financing. REG is based in Ralston, Iowa, and operates seven biodiesel plants, with another three under construction and two more planned.

US biodiesel producers have been struggling with tight margins due to the soaring cost of soy oil, with the industry running at an estimated 25% capacity.

That discouragement for investors has been compounded by the slump in US share values as the economy has slowed and recession clouds have gathered. Ethanol producers have also been out of favour with investors.

After reaching a peak at 14,198.10 on 11 October, the New York Stock Exchange's bellwether Dow Jones Industrial Average tumbled 18% before touching a bottom on 22 January, then partly recovering.

The index closed at 12,548.64 on Monday, still down by 12% from the October peak.

($1 = €0.65)

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Author: Stephen Burns
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