REG Signs Agreement With Three Biodiesel Plants To Consolidate
Biodiesel industry leader to acquire 105 million gallons of additional capacity per year.
Compiled by staff
Published: May 12, 2009
Biodiesel plants Western Iowa Energy, in Wall Lake, Iowa; Central Iowa Energy, LLC, of Newton, Iowa; and Blackhawk Biofuels, LLC, of Danville, Ill., agreed to consolidation with the Renewable Energy Group on Tuesday.
All four companies will be consolidated in a new holding company to be named Renewable Energy Group, Inc. The current members of the three acquired companies and current Renewable Energy Group investors will own the new company. The transaction is subject to approvals by the shareholders of all four companies and to other conditions, including customary regulatory approvals.
Demand by major petroleum distributors and oil refiners was cited by REG's chairman and chief executive officer Jeff Stroburg as a key factor in the decision to move forward with plant consolidation.
"As the Renewable Fuels Standard 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."
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Tagged: biodiesel, biofuels
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