The Andersons to purchase Amaizing Energy plant in Denison, Iowa

By Kris Bevill | March 04, 2012

The Andersons Inc. has entered into an agreement to purchase the 55 MMgy Amaizing Energy Denison LLC plant in Denison, Iowa, along with an adjacent 2.7 million bushel grain terminal, for an undisclosed sum. The sale is expected to be complete in the second quarter of this year, at which time the facility will be owned be a subsidiary known as The Andersons Denison Ethanol LLC.

The Andersons currently operates three ethanol plants, located in Michigan, Ohio and Indiana, with a combined operating capacity of 275 MMgy. Neil McKinstray, president of the company’s ethanol group, noted that acquisition of the Denison plant will provide The Andersons’ ethanol business with geographic diversity and a larger overall market. “This purchase enables us to expand our ethanol production, marketing and services into a new region providing arbitrage and risk management opportunities with the three existing plant we manage while leveraging existing administrative staff to a fourth plant,” he said. “With much of the same technology in all four plants, we expect to bring additional efficiencies to drive down our cost per gallon, and maximize returns to shareholders as we have successfully demonstrated during the past five years.”

The fact that both the Denison plant and the nearby terminal offer direct access to two Class 1 railroads in Iowa offered additional incentive for The Andersons, which is an investor in the Iowa Northern Railway Company. CEO Mike Anderson said the plant is a good fit for his company, adding that the facility is well-run, well-respected and has a solid customer base.

The Denison plant is currently operating but has been experiencing liquidity concerns, according to a press statement from Sam Cogdill, chairman and CEO of Amaizing Energy. He said selling the plant to The Andersons will address those concerns while retaining the economic benefits offered to the area by the ethanol facility. “Our investors committed to Amaizing Energy to earn a good return on their investment and to further local economic development and we feel great about having met both of those goals,” he said. “Placing Amaizing Energy on the market while it was a profitable operation has allowed it to reach a fair deal with a great company who we know will operate our plant properly.”

The closing of the sale is contingent upon normal sale transaction conditions, according to The Andersons, and is expected to be completed in a timely manner. In the future, The Andersons will continue to seek additional acquisitions that fit within its growth strategy and offer the potential for solid returns to the company’s shareholders, according to Debra Crow, corporate communications manager.

Amaizing Energy continues to operate a 100 MMgy ethanol plant in Atlantic, Iowa.