Renewable Energy Group (REG) executed a purchase agreement to acquire a 30-million gal/year biodiesel plant from Soy Energy, the companies announced on Friday.
Pursuant to the agreement, REG will acquire the biorefinery in Mason City, Iowa, for $11 million in cash and the issuance of a $5.6 million promissory note to Soy Energy.
The acquisition is subject to customary closing conditions, including approval of the transaction by the Soy Energy unit holders.
The Mason City plant, originally built to process highly refined raw materials in 2006, was purchased by Soy Energy in 2010 and upgraded to utilize a larger variety of raw materials including animal fats and used cooking oil. The plant was idled in mid-2012 due to market conditions and manufacturing challenges.
Renewable Energy Groups offer provides the best value for Soy Energy unit holders while helping unit holders achieve their mission for promoting economic development in the area, said Jeff Oestmann, Soy Energys CEO. In addition, REGs procurement know-how and proven business model of using lower cost raw materials makes them a reliable operator for this plant.
REG plans to repair then restart the refinery and further upgrade the plant in the future. The acquisition would increase REGs biodiesel production capacity to 257 million gal/year. REG currently owns seven active biodiesel refineries in five states, including nearby plants in Newton and Ralston, Iowa and Albert Lea, Minnesota.
We are committed to the people of Mason City, Midwestern farmers and livestock producers and those who supply the fats, oils and greases we will buy, said Daniel J. Oh, REG chief executive.
REG expects approximately 30 full-time, family-wage jobs to be filled at the plant.
The Soy Energy plant is strategically positioned within the REG network of plants to meet regional and national demand for lower carbon, clean-burning biodiesel, Oh said.