Renegy Holdings, Inc. (Nasdaq: RNGY), a renewable energy company focused on acquiring, developing and operating a portfolio of biomass to electricity power generation facilities, announced today that it has signed a Letter of Intent (LOI) to purchase a 20 megawatt (MW) biomass power plant from Sierra Pacific Industries (SPI) for $13.0 million.
The plant operates in Loyalton, California and currently sells 10 MW of its electrical power output to Sierra Pacific Power (SPP), a leading electric utility company serving northern Nevada and northeastern California.
"The Loyalton plant will provide us with an additional source of revenue and anticipated positive cash flow from the plant during the second half of 2008," stated Bob Worsley, chairman and CEO of Renegy. "Acquiring this plant, together with the Ione plant that we announced last week, will increase the electrical power output capacity of our portfolio of biomass power generating assets to 75 MW, and advance us toward our goal of building the operating critical mass necessary for Renegy to become a self-sustaining business beginning in 2009."
Fuel for the Loyalton plant is comprised primarily of wood waste provided through long-term contracts with local suppliers. Fifty percent of the fuel is currently derived from sawmills and other forest residue from the surrounding area, and the other fifty percent is derived from municipal wood waste accumulating in nearby landfills. To further supplement its fuel supply, Renegy’s fuel aggregation team is currently in negotiations with a large waste management company in the area, and plans to actively explore opportunities to procure forest-derived fuel from U.S. Forest Service lands.
Renegy expects the transaction to close by June 30, 2008. Renegy will provide partial payments toward the purchase price. Payment of the substantial majority of the purchase price will not be due until December 31, 2008.
About Renegy
Renegy, based in Tempe, Arizona, is a renewable energy company focused on acquiring, developing and operating a portfolio of biomass power generation facilities. Renegy’s current biomass power generating assets include a 24 megawatt (MW) facility near Snowflake, Arizona that is scheduled to begin commercial operations this quarter, and an idle 13 MW biomass plant in Susanville, California that has the potential to be restarted by the end of 2008. Renegy’s other business activities include an established fuel aggregation and wood products division, which collects and transports forest thinnings and woody waste biomass fuel to its power plants, and which sells logs, lumber, shaved wood products and other high value wood by-products to reduce the cost of fuel for its primary business operations.
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