Green Plains Renewable Energy, Inc. (NASDAQ: GPRE) earlier this month acquired majority interest in Houston-based biofuel terminal operator Blendstar, LLC.
The transaction involved a membership interest purchase whereby Green Plains acquired 51% of Blendstar from Bioverda U.S. Holdings LLC for $9.0 million. Blendstar currently operates terminal facilities in Oklahoma City, Little Rock, Nashville, Knoxville, Louisville and Birmingham. Additionally, Blendstar has announced commitments to build terminals in Collins, Mississippi and Shreveport, Louisiana.
"Through Blendstar, we are making an important investment in downstream biofuel enterprises," said Todd Becker, CEO. "The Blendstar platform allows customers to source, store and blend ethanol and biodiesel to meet growing demand, now and in the future. Green Plains will continue to be a Blendstar customer, and the relationship should benefit Green Plains’ growing third-party marketing business."
Blendstar’s strategy is to locate facilities in mid-sized metropolitan areas where biofuels are underutilized. Generally, the sites are in close proximity to major fuel terminals and transportation corridors. The facilities are fully automated and provide some of the most efficient blending and loading operations available. Blendstar has an aggressive growth strategy revolving around development of new sites in additional U.S. markets. Up to ten additional terminal sites are currently under consideration, according to a release.
"There is a current lack of ethanol and biodiesel blending infrastructure in many markets," said Matt Griswold, President of Blendstar. "Blendstar occupies an important market position, serving as first mover into key geographic areas and underserved markets."
"Blendstar will be an important component of Green Plains’ vertical integration strategy," said Becker. "Green Plains now has positions throughout the ethanol value chain, beginning in the farm fields with our agronomy and grain handling operations, and ending with the fuel retailers utilizing Blendstar’s blending facilities.
"The Blendstar investment is Green Plains’ first significant investment since closing the VBV LLC merger in October 2008," concluded Becker. "Simultaneously at the VBV closing in October 2008, certain of VBV’s equity holders invested $60 million in Green Plains’ common stock, strengthening our balance sheet, which in turn allows us to pursue new opportunities for strategic growth."
Green Plains, based in Omaha, Nebraska, is a vertically-integrated ethanol producer. Green Plains’ ethanol segment operates four ethanol plants in Iowa, Indiana and Tennessee with a combined expected operating capacity of 330 million gallons of ethanol per year. Green Plains also operates an independent third-party ethanol marketing service, with marketing capacity of 305 million gallons of per year. Green Plains’ agribusiness segment operates grain storage facilities and complementary agronomy, feed and fuel businesses. Green Plains has grain storage capacity of approximately 22 million bushels.
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