Ethanex Energy, Inc. (OTCBB: EHNX), a development stage company planning to engage in the ownership and operation of ethanol plants as well as development and sales of low-cost ethanol production technology, has agreed to purchase an ethanol plant located in Sutherland, Nebraska from Midwest Renewable Energy, LLC (MRE).
The facility currently produces 26 million gallons per year (MGY) and is undergoing a two-phase expansion. Each phase is planned to add an additional 42.5MGY of production capacity to the plant, which would bring the plant’s total capacity to 111MGY upon completion.
The first phase of the expansion is scheduled for completion in Q308, and the second phase in Q109.
“This acquisition will transform our company. It will provide Ethanex with immediate production and revenue at a cost that we believe is below that of building a new facility,” said Al Knapp, President and CEO of Ethanex. “This facility will also serve as a showcase to demonstrate our fractionation platform. We expect that sales of integrated fractionation systems to third parties will become an additional avenue for our company’s growth in the future.”
Ethanex plans to add its integrated fractionation platform to the plant in order to increase efficiency and profitability. Ethanex has developed the fractionation system in collaboration with Buhler, Inc., a technology group and global market leader in grain milling, food processing, chemical process engineering and die casting.
Based on the anticipated timing of the acquisition and the planned plant expansion, Ethanex said it expects the fractionation mill would become operational in the Q308, in conjunction with the startup of the first phase of the plant’s expansion.
Ethanex estimates the increase in production that will result from the use of fractionated feedstock will allow for increased plant capacity up to approximately 79MGY after the first phase of expansion and to approximately 128MGY when the plant expansion is complete.
Ethanex and MRE have agreed to a purchase price of $220 million, consisting of $170 million in cash and $50 million in Ethanex common stock. This does not include the cost of the fractionation facility, which Ethanex plans to construct on its own.
The acquisition is schedule for three separate transactions. The initial transaction will be the purchase of the current operating assets for $50 million in cash and is anticipated to close in Q108. The second and third transactions will coincide with the completion of construction of the two expansion phases. Ethanex will pay MRE $60 million in cash and will issue $25 million of Ethanex common stock at each of those two additional closings.
Ethanex plans to seek third-party debt and equity financing to fund the acquisition and the construction of the fractionation mill.
Ethanex says, In light of the opportunity, size and timing of the MRE transaction, it will defer efforts to seek financing for the construction of its planned projects in southern Illinois or northeast Kansas. Ethanex said that it expects pre-construction development work to continue at those sites to facilitate the possible financing and construction of the two facilities in the future.
About Ethanex Energy, Inc.
Ethanex is a renewable energy company whose mission is to be a low cost producer of renewable energy by employing advanced technology in design, construction and operation of ethanol plants. Ethanex is based in Basehor, Kansas with offices in Santa Rosa, California and Charleston, South Carolina.
Loading...