Green Plains not exiting ag sector with sale of grain elevators

By Holly Jessen | October 30, 2012

Green Plains Renewable Energy Inc. announced Oct. 29 that it was selling 12 of its 15 grain elevators, or about 83 percent of its grain storage capacity and all of its agronomy and retail petroleum operations. Still, Todd Becker, president and CEO of Green Plains, said that diversification will remain one of the company’s strategies for success. “We are by no means exiting U.S. agriculture, albeit we might look like that,” he told Ethanol Producer Magazine.

The company, which owns and operates nine ethanol plants, has entered into an asset purchase agreement with The Andersons Inc. The estimated sales price is $133.1 million with the assumption at closing of term debt of about $28 million. The transaction is expected to close in the fourth quarter pending customary closing conditions and regulatory approvals. In all, the company expects net cash proceeds, including working capital liquidation, of about $103.8 million.

The sale provided Green Plains with an opportunity to realize value for its shareholders and get rid of debt. Although the company is hardly cash strapped, the injection of cash is a positive as well. “We’re going to use that for growth capital in all of our segments, which may include more agricultural assets in the future,” Becker said, adding that the company is now in the strongest financial position it has ever been in, despite a tough year in the ethanol sector.

Green Plains will retain three grain elevators located in Nebraska, Iowa and Missouri, which have a combined storage capacity of about 6 million bushels. The company expects to generate more than $60 million in nonethanol operating income in 2012 and anticipates a strong 2013 in that sector as well, he said.

Asked if the company has any plans to enter into the cellulosic ethanol business, Becker was swift to answer in the negative. Currently, Green Plains doesn’t see bolt-on technology options that allow for commercialization at a rapid pace. “We’ll be fast followers not early adopters,” he said.