AMES, IA --- Renewable Energy Group, a major biodiesel marketer, announced it has entered into agreements to consolidate with three commercial-scale biodiesel plants.
Western Iowa Energy in Wall Lake, Iowa; Central Iowa Energy LLC in Newton, Iowa; and Blackhawk Biofuels LLC in Danville, Ill., are involved in the transaction.
The facilities represent an additional 105 million gallons per year of wholly owned production capacity that would allow the combined entity to "better position itself to meet anticipated demand from the petroleum industry's distillate fuel market," Renewable Energy Group said. Ownership of the operations of all four companies will be consolidated in a new holding company to be named Renewable Energy Group Inc.
The consolidated company will be owned by the current members of the three acquired companies and current Renewable Energy Group investors, including Bunge North America, ED&F Man, Natural Gas Partners, NGP Energy Technology Partners, US Renewables Group (USRG) and West Central Cooperative.
The transaction is subject to approvals by the shareholders of all four companies and to other conditions, including regulatory approvals.
REG CEO Jeff Stroburg cited demand by major petroleum distributors and oil refiners as a key factor in the decision to move forward with plant consolidation.
"As the Renewable Fuels Standard (RFS) 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.
Under the 2007 Energy Independence and Security Act, the RFS calls for 500 million gallons of domestic biodiesel consumption ramping up to 1 billion biodiesel gallons in 2012.
"We believe this proposed consolidation brings greater economies of scale, streamlined central management of complex logistics and decision-making processes, and enhanced risk management opportunities," said Daniel J. Oh, REG's president and chief operating officer. "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."