Glacial Lakes to purchase ABE’s 2 South Dakota ethanol plants

By Erin Voegele | August 06, 2019

Advanced Bioenergy LLC announced Aug. 5 an agreement to sell its two corn ethanol plants in South Dakota to Glacial Lakes Energy LLC for $47.5 million plus the value of ABE inventory at the time of closing. The transaction is expected to close during the third quarter of this year.

News of the sale comes approximately five months after ABE’s February 2019 announcement that it had begun exploring strategic alternatives for its business operations, including the possible sale of one or both of its South Dakota-based ethanol plants. ABE retained Ascendant Partners Inc. to advise it in that process and help evaluate the opportunities and options available to the company. 

Documents filed with the U.S. Securities and Exchange Commission indicate that the ABE, together with its subsidiary ABE South Dakota LLC, entered into the asset purchase agreement with GLE on Aug. 1. The transaction is subject to approval of the ABE unitholders and other customary closing conditions, including a portion of the sales proceeds being held in a third party escrow indemnity account after closing to support ABE’s indemnification obligations under the asset purchase agreement. The transaction is expected to close during the third quarter of this year. ABE said it will continue to operate the Huron and Aberdeen plants until the transaction closes. 

In connection with the sale, ABE said it will be adopting, subject to unitholder approval, a plan on liquidation under which the company will be liquidated.

Glacial Lakes Corn Processors discussed the transaction in an Aug. 1 letter to shareholders. “Strategically, both SBE plants fit well into GLE’s current marketing, operational and administrative footprint,” the company said in the letter. “The Aberdeen plant, which began operating in 2008, currently produces about 49.0 million gallons per year; it includes unit train shipping capabilities (loop track). The Huron plant, which began operations in 1998 and was retro-fitted in 2006, currently produces about 33.0 million gallons per year; it has achieved a very favorable carbon intensity score on its ethanol production.”

Within the letter, Glacial Lakes said it has conducted an extensive due diligence analysis of how the two plants would fit into its current footprint and sees operational, commercial and administrative economies of scale that that wouldn’t otherwise be available. “Although margins have been difficult recently, the board and management remain optimistic about the long-term prospects of ethanol and higher blends,” Glacial Lakes continued.

The addition of the ABE plants will boost Glacial Lakes total ethanol production capacity to approximately 350 MMgy said the company in the letter.