Renewable Energy Group, Inc. (REG) is purchasing a 20-million-gallon biodiesel refinery in DeForest, Wis., U.S.A., from Sanimax Energy, LLC. Sanimax also operates a grease processing facility at the same location, although that facility is not part of the acquisition. Closing of the transaction is subject to customary closing conditions.
Upon closing of the transaction, Renewable Energy Group, which is based in Ames, Iowa, U.S.A., will have 11 active North American biomass-based diesel refineries in seven states: Iowa (3), Illinois (2), Texas (2), Louisiana, Minnesota, Washington and Wisconsin (1 each), with a combined nameplate production capacity of 452 million gallons.
Sanimax is a privately owned North American rendering company operating from 16 locations in Canada and the U.S.A. It offers innovative environmental solutions, services and products to the agri-food industry, covering the collection, processing and enhancement of organic by-products.
Under the asset purchase agreement, REG will pay Sanimax approximately USD 11 million in cash and will issue 500,000 shares of REG common stock in exchange for the biorefinery and related assets. REG will also pay Sanimax up to an additional UDD 5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be re-named REG Madison, LLC.
“With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well,” said Daniel J. Oh, REG president and CEO. “This plant will add to our network of lower-cost, lower-carbon intensity, multi-feedstock biorefineries. Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages. We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship.”
“This agreement is in line with our business plan to improve focus on our core businesses,” said Martin Couture, Sanimax president and CEO. “Sanimax looks forward to continuing its excellent business relationship with REG as a shareholder and a reliable feedstock supplier.”
The biorefinery is located just north of Madison, Wis. and began production in 2007. Using the same REG patented and proven high free fatty acid processing technology as the company’s Seneca, Ill. plant, it produces biodiesel from lower cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil, in addition to refined vegetable oils. The facility has both truck and rail capabilities.