Green Plains to purchase 2 BioFuel Energy plants

By Erin Voegele | November 05, 2013

On Nov. 5, Green Plains Renewable Energy Inc. announced it has entered into a definitive agreement to acquire two 110 MMgy ethanol plants of BioFuel Energy Corp. from an entity composed of its lender group. The two facilities covered by the transaction include the Pioneer Trail Energy plant in Wood River, Neb., and the Buffalo Lake Energy facility in Fairmont, Minn. According to GPRE, the transaction is expected to close before the end of the year.

BioFuel Energy had previously agreed to transfer the ethanol plants to the lender group entity pursuant to a deed in lieu of foreclosure. According to information released by GPRE, it will purchase the two plants and certain related assets from the lender group entity once that transfer is complete.

BioFuel Energy has been exploring the possibility of selling the plants since at least early 2013. The company idled the Fairmont plant in Sept. 2012 following a missed $3.6 million debt payment, citing high corn prices resulting from the drought. Staff was subsequently reduced at the facility in February.  In March, the BioFuel Energy announced it had engaged Piper Jaffray & Co. to act at its financial advisor, with the goal of exploring strategic alternatives. This included the potential sale of one or both of its ethanol plants. In its second quarter financial results, issued in August, BioFuel Energy reported that the grace period provided under its previously disclosed lender agreement expired at the end of July, but noted it was continuing to engage in discussions regarding the transfer of its plants.

According to GPRE, it will purchase the plants for approximately $101 million, plus working capital at closing. The company intends to fund the purchase with approximately $77 million in term debt and the balance in cash.

"Our growth strategy remains focused on right location, right technology at the right price for ethanol production assets and this acquisition meets all three criteria," said Todd Becker, president and CEO of GPRE.

“We’ve gotten very efficient in understanding and running both IMC processing technologies and Delta-T processing technologies, which these two plants are,” added Jim Stark, GPRE spokesman, noting that once the transaction closes GPRE will further evaluate each plant to determine if there is an opportunity to make improvements. He also stressed that GPRE intends to get the Fairmont plant up and running by the end of the year.

GPRE already owns 10 ethanol plants. Once the purchase of the Fairmont and Wood River plants is complete, the company will have the capacity to produce more than 1 billion gallons of ethanol per year, along with 2.9 million tons of distillers grains and 230 million pounds of corn oil.