VeraSun Energy Corporation today announced plans to acquire three ethanol plants with a combined annual production capacity of 330 million gallons per year (MMGY) from ASAlliances Biofuels for $725m.
The three facilities are each expected to operate at 110MMGY and are located in Albion, Nebraska, Bloomingburg, Ohio, and Linden, Indiana. The acquisition is subject to customary closing conditions.
According to a statement, the facilities will provide VeraSun with immediate production capacity and revenue. The Linden facility will begin start-up operations this month, followed by Albion in the fourth quarter and Bloomingburg by the end of first quarter 2008. The acquisition will increase VeraSun’s production capacity to approximately one billion gallons by the end of 2008.
‘This is a unique opportunity to acquire immediate production and revenue at a cost similar to that of building new facilities,’ said Don Endres, VeraSun Chairman and CEO.
VeraSun currently has 340MMGY of production capacity through its operating facilities in Aurora, South Dakota and Fort Dodge and Charles City, Iowa. VeraSun has another 330MMGY of production presently under construction and development in Hartley, Iowa, Welcome, Minnesota, and Reynolds, Indiana. The facilities being acquired are sister facilities to VeraSun’s current fleet as they are all designed by ICM and built by Fagen.
The company is funding the acquisition through $200m of equity, $250m of cash and $275m in project financing. The acquisition is expected to be accretive to earnings and free cash flow within the first 12 months without accounting for potential synergies.