AgriFuel Co., a privately held biofuel concern, has acquired interests in two northeastern biodiesel producers and is near closing on a third.
AgriFuel purhcased 45% of the equity of York, Pennsylvania-based United BioFuels, Inc., with an option to increase its stake to 60%, and 52.5% of the stock of Buffalo Biodiesel, Inc. of Buffalo, New York with a right to buy the rest of the Company’s outstanding stock.
United operates a soy oil processing facility using proprietary production technology. The company is expanding its plant’s production capacity to four million gallons per year while incorporating technological upgrades that will enable it to process lower-cost feedstocks. Completion of the expansion is targeted for August 2007.
Buffalo Biodiesel is in the initial phase of constructing a four-million-gallon biodiesel plant using a proven state-of-the-art modular technology. It is also aggressively expanding its existing waste oil collection business, which is expected to contribute up to 50% of the feedstock for Buffalo Biodiesel’s biodiesel production plant. The remainder of the plant’s raw materials will consist of soy oil and used vegetable (“yellow grease”) oil purchased from third parties.
AgriFuel expects to acquire the remaining 47.5% of Buffalo Biodiesel’s stock within twelve months. No schedule has been announced for the additional purchase of United stock. AgriFuel expects its aggregate investment in the two ventures, including acquisition and expansion capital, to total $2.5 million on a combined basis within the next year.
AgriFuel is also finalizing terms of an investment in a Midwestern biodiesel producer in a contemplated amount of $6.5 million. The company under review has been issued a permit to construct a facility with a capacity to make thirty million gallons of biodiesel per year from a combination of animal fats, yellow grease and crude de-gummed soy oil utilizing state-of-the-art technology. AgriFuel is also evaluating a number of additional opportunities consistent with its strategy of developing wholly-owned plants in the Eastern Seaboard and investing in existing or development-stage biodiesel projects.
AgriFuel focuses on biodiesel within the market for biofuels, which are alternatives to petroleum-based energy sources made from natural and renewable resources like soybeans and other oil-producing plant materials as well as spent vegetable oils and animal fats from restaurants. Biofuels are clean-burning fuels containing no petroleum that can be used in blends with distillate petroleum products or independently in motor vehicles and in certain home heating systems. Biodiesel is an alternative to various oil distillate products, including diesel and certain home heating oils, that can be used in a variety of diesel engines and home heating systems.
AgriFuel’s largest stockholder is Metalico, Inc., (AMEX:MEA) a public corporation with facilities in Upstate and Western New York among other locations. Metalico has been using blends ranging from 20% to 80% biodiesel (identified in the industry as B20 and B80) since June of 2005 to fuel most of the trucks and off-road heavy equipment used in its New York State operations. Metalico expects to be a significant end-use customer of Buffalo Biodiesel.
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. The Company operates seven recycling facilities through New York State and five lead fabrication plants in four states. Consistent with Metalico’s overall green initiative, Metalico buys 50% of its electricity for its New York and New Jersey locations from regional wind farms that generate power from windmills. As a recycler of metals, the company is first and foremost in the resource recycling and conservation business.
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