AMES, Iowa–(BUSINESS WIRE)–Renewable Energy Group, Inc. (NASDAQ:REGI) announced today that it has signed an asset purchase agreement with Sanimax Energy, LLC to acquire Sanimax’s 20 million gallon nameplate capacity biodiesel refinery located in DeForest, Wisconsin.
Under the asset purchase agreement, REG will pay Sanimax approximately $11 million in cash and will issue 500,000 shares of REG common stock in exchange for the biorefinery and related assets. REG will also pay Sanimax up to an additional $5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be re-named REG Madison, LLC. Sanimax operates a grease processing facility at the same location, although that facility is not part of the acquisition. Closing of the transaction is subject to customary closing conditions.
“With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well,” said Daniel J. Oh, REG President and CEO. “This plant will add to our network of lower-cost, lower-carbon intensity, multi-feedstock biorefineries. Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages. We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship.”
“This agreement is in line with our business plan to improve focus on our core businesses,” said Martin Couture, Sanimax’s President and CEO. “We are pleased that our biodiesel employees will have an opportunity to pursue their career with an industry leader. This is a reflection of the excellent work they have achieved over the past several years. Sanimax looks forward to continuing its excellent business relationship with REG as a shareholder and a reliable feedstock supplier.”
The biorefinery is located just north of Madison, Wisconsin and began production in 2007. Using the same REG patented and proven high free fatty acid processing technology as the Company’s Seneca, IL plant, it produces biodiesel from lower cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils. The facility has both truck and rail capabilities.
Upon closing of the transaction, REG will have 11 active North American biomass-based diesel refineries in seven states (Iowa (3), Illinois (2), Texas (2), Louisiana, Minnesota, Washington and Wisconsin (1 each)) with a combined nameplate production capacity of 452 million gallons.
About Renewable Energy Group
Renewable Energy Group, Inc. is a leading North American advanced biofuels producer and developer of renewable chemicals. REG utilizes a nationwide production, distribution and logistics system as part of an integrated value chain model to focus on converting natural fats, oils and greases into advanced biofuels and converting diverse feedstocks into renewable chemicals. With 11 active biorefineries across the country, research and development capabilities and a diverse and growing intellectual property portfolio, REG is committed to being a long-term leader in bio-based fuels and chemicals.
For more than a decade, REG has been a reliable supplier of advanced biofuels which meet or exceed ASTM quality specifications. REG sells REG-9000™ biomass-based diesel to distributors so consumers can have cleaner burning fuels that help diversify the energy complex and increase energy security. REG-9000™ biomass-based diesel is distributed in most states in the US. REG also markets ultra-low sulfur diesel and heating oil in the northeastern and midwestern US. For more information on REG visit our website at www.regi.com.
Sanimax is a privately owned North American rendering company operating from 16 locations in Canada and US. It offers innovative environmental solutions, services and products to the agri-food industry, covering the collection, processing and enhancement of organic by-products. Reclaim, Renew and Return is what our 950 employees do proudly every day for more than 75 years. We are the 3R.
Note Regarding Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding the expectation that the acquisition will close and timing of closing and potential cost savings due to the location of the facility. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to the satisfaction of closing conditions to the transaction, REG’s ability to successfully operate the facility and integrate the facility with its existing business, REG’s ability to reach agreement with Sanimax on grease supply and other risks and uncertainties described from time to time in REG’s quarterly report on Form 10-Q for the period ended September 30, 2015, annual report on Form 10-K for the year ended December 31, 2014 and other periodic filings with the Securities and Exchange Commission. All forward-looking statements are made as of the date of this press release and REG does not undertake to update any forward-looking statements based on new developments or changes in our expectations.