As biobased diesel surges, REG buys Imperium Renewables for $32M and a back-end deal

August 2, 2015 |

REGIBiggest US biodiesel, renewable diesel producer buys the biggest US facility in asset deal.

In Iowa, REG will acquire substantially all the assets of Imperium Renewables, including a 100-million gallon nameplate capacity biomass-based diesel refinery and deepwater port terminal at the Port of Grays Harbor, Washington, according to an asset purchase agreement signed by the two companies.

The fully-operational 100-million gallon nameplate capacity biorefinery will be renamed REG Grays Harbor.  The facility includes 18 million gallons of storage capacity and a terminal that can accommodate feedstock intake and fuel delivery on deep-water PANAMAX class vessels as well as possessing significant rail and truck transport capability.

Imperium

The 100 million gallon/year facility in Hoquiam, Washington state

REG will pay Imperium $15M in cash and issue 1.5 million shares of REG common stock in exchange for substantially all of Imperium’s assets.  In addition to these payments, REG will pay either $1.75 million in cash or 175,000 shares of REG common stock at closing as elected by REG.  For two years post-closing, Imperium may receive up to a $0.05/gallon payment for biomass-based diesel produced and sold. Were the Washington state-based plant to be used at 50% of operating capacity, the additional payments would be $5 million to Imperium’s investors.

At closing, Imperium will retain its net working capital value of approximately $25 million, and REG will also assume $5.2 million of Imperium’s debt from Umpqua Bank, which has agreed to provide REG Grays Harbor, LLC with an additional loan capacity of up to $5 million to fund capital expenditures and improvements at the Grays Harbor facility.  Closing is subject to satisfaction of customary closing conditions.

With debt assumption and working capital retained by Imperium, the deal valued Imperium at $62 million, plus the value of the back-end deal.

Deeper look behind the story

Our 2015 5-Minute Guide to REG is here.

Reaction from the stakeholders

“Bringing the Imperium assets and their team into the REG network is a tremendous addition to our business,” said REG President and CEO Daniel J. Oh.  “As we combine our companies, we will expand the reach of REG along the west coast, including production and distribution.  We already sell into these markets as they have responded to the call for more clean, advanced biofuels through low carbon fuel standards.  This will enable REG to be more efficient and timely in our delivery and improve our supply assurance. We look forward to working with Imperium’s experienced staff and plant employees, maintaining operational activities at Grays Harbor, and becoming active members of the community working with the Port of Grays Harbor and the cities of Hoquiam and Aberdeen.”

“REG’s growth over the last eight years has made them an industry leader and our biodiesel facility in Hoquiam will greatly expand their domestic production footprint and continued success.” said John Plaza, president and CEO of Imperium Renewables. “We hope our facility will help them continue to grow and diversify biofuel production and sales both locally and around the region.”

Umpqua Bank officials welcomed the deal.  “We are very pleased to support REG in its acquisition of Imperium and growing their business here for the long-term future,” said Danielle Burd, Executive Vice President and Regional Manager at Umpqua Bank. “We had a great relationship with Imperium over the last several years and look forward to continuing that as a lender to REG Grays Harbor.”

 

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