Jul 24 2007
VeraSun Energy Corporation, one of the nation’s largest ethanol producers, today announced plans to acquire three ethanol plants with a combined annual production capacity of 330 million gallons per year (MMGY) from ASAlliances Biofuels, LLC for $725 million.
The three facilities are each expected to operate at 110MMGY and are located in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana. The acquisition should become final in 30 to 45 days and is subject to customary closing conditions.
The facilities will provide VeraSun with immediate production capacity and revenue. The Linden facility will begin startup operations this month, followed by Albion in the fourth quarter and Bloomingburg by the end of first quarter 2008. The acquisition will increase VeraSun’s production capacity to approximately one billion gallons by the end of 2008.
“This is a unique opportunity to acquire immediate production and revenue at a cost similar to that of building new facilities,” said Don Endres, VeraSun Chairman and CEO. “The capacity gained through this acquisition underscores a commitment to our long-term growth strategy while maintaining our focus on being an efficient, low-cost ethanol producer.”
“We are pleased that the transaction allows us to continue our investment in ethanol through VeraSun,” said Tom Manuel, ASAlliances Biofuels President and CEO. “VeraSun brings experience and expertise to the operation of large, efficient biorefineries and we believe they are the premier platform company in the renewable fuels industry.”
VeraSun currently has 340MMGY of production capacity through its operating facilities in Aurora, South Dakota and Fort Dodge and Charles City, Iowa. VeraSun has another 330MMGY of production presently under construction and development in Hartley, Iowa, Welcome, Minnesota, and Reynolds, Indiana. The facilities being acquired are sister facilities to VeraSun’s current fleet as they are all designed by ICM and built by Fagen, Inc.
The company is funding the acquisition through $200 million of equity, $250 million of cash and $275 million in project financing. The acquisition is expected to be accretive to earnings and free cash flow within the first 12 months without accounting for potential synergies.
“Reaching one billion gallons of annual production will be a benchmark for VeraSun and represents a maturing of the renewable fuels industry,” said Endres. “We believe scale and efficiency are important as we continue to focus on reducing production and distribution costs and increasing value for our shareholders, customers and plant communities.”
Current ASAlliances plant employees will become VeraSun employees at the conclusion of the sale.