|Green Plains buys Central City ethanol plant|
by Laurie Pfeifer
After sitting in hot-idle mode for five months, the Central City ethanol plant should be back up and running by the end of July.
That’s the intent of Green Plains Renewable Energy, Inc., the Omaha-based company that entered into a $123.5 million purchase agreement with AgStar Financial Services last week for the ethanol plants located in Central City and Ord.
With the acquisition, Green Plains will become the fourth largest ethanol producer in the United States with production capacity of 480 million gallons per year.
Dwayne Braun, manager of the former VeraSun plant in Central City, said he hopes to be buying corn and selling distillers grain in short order, continuing to build strong relationships with area farmers and giving the ag economy a boost.
Green Plains communications director Jim Stark said the company anticipates having the Central City plant up and running by the end of July.
Before that can happen, however, Stark said the company must complete the purchase and financing documents by the end of June and then have an official closing.
Closing of the transactions is subject to standard conditions, including regulatory approvals and concurrent closing on debt financing.
"But we’re going to work right now," Stark added. "We’ll be in Central City next week to meet with employees and there are some small upgrades and repairs to do in the meantime."
Before VeraSun filed for bankruptcy protection, Stark said it was his understanding the workforce at the Central City plant stood in the neighborhood of 50 employees.
"Our intent is to hire most, if not all, of those employees," he said.
While the purchase agreement comes as good news for the ethanol plant employees and area corn producers, Braun said it also can be seen as renewed confidence in the ethanol industry.
"When you look at the selling price, it’s reassuring that people are still willing to bet on this industry and know we’ll provide a good energy source from a Midwest product," he said.
Stark said he also is optimistic about the ethanol industry right now.
"We’re starting to see the industry come back and there’s now some equilibrium between corn and ethanol prices and margin increases. The timing is good on our part, in light of the Obama administration’s efforts to increase the renewable fuels standards," he said in reference to the National Renewable Fuel Standard that establishes new volume requirements for biofuels which must be used in transportation fuels each year to meet the requirements of the 2007 Energy Independence and Security Act (EISA).
"We’re very optimistic about our industry," Stark said.
Todd Becker, Green Plains’ president and chief executive officer, said the acquisition of the plants in Central City and Ord will lower their cost of production and improve their ability to compete in the industry.
"This purchase is consistent with our strategy to selectively acquire assets at reasonable valuations that provide long-term benefits to our shareholders," Becker said.
The Green Plains CEO said plants the company is acquiring are in excellent locations.
"Within the 14 contiguous counties surrounding Ord and Central City, there are 300,000 cattle on feed and approximately 300 million bushels of corn grown annually," he said. "This close proximity to large feed operations and vast corn supplies will reduce our energy and feedstock costs at these facilities."
AgStar Financial Services’ lending group recently acquired the plants through VeraSun Energy’s bankruptcy auction.
"We’re pleased to sell these plants to Green Plains Renewable Energy," said Paul DeBriyn, president and CEO of AgStar Financial Services.
"Green Plains is committed to this industry and it’s great to know these facilities will soon be producing ethanol. This company has demonstrated its expertise in successfully operating ethanol plants and we are excited to expand our relationship with them."
Becker noted that much of the success of the two plants they are acquiring is dependent on building solid relationships in Central city, Ord and the surrounding areas.
"We look forward to working with lenders in each community and the employees at these facilities," he said.