Green Plains Inc. is to sell three of its ethanol plants to Valero Renewable Fuels Company. The plants are located in Lakota, Iowa, Bluffton, Ind., and Riga, Mich. for $300m in cash, plus approximately $28m of working capital also paid in cash. 

The transaction involves 280 million gallons of nameplate capacity, approximately 20 percent of the company’s reported ethanol production capacity.

“The sale of these three ethanol plants demonstrates our commitment to strengthening our balance sheet and unlocking value for our shareholders,” said Todd Becker, President and Chief Executive Officer of Green Plains. “As we stated in May, when we outlined our Portfolio Optimization Program, we would divest assets that enable us to execute our long-term strategic objectives. This sale is the first step towards our strategic objectives to prove the value of our assets and to significantly reduce or eliminate term debt by the end of 2018. We will continue with our optimization plan and anticipate communicating additional transactions in the near future.”

Green Plains Inc. also entered into an asset purchase agreement with Green Plains Partners LP to acquire the storage and transportation assets and the assignment of railcar leases associated with the Lakota, Bluffton and Riga ethanol plants. Green Plains Inc. will exchange approximately 8.9 million units it owns of the Partnership, valued at $120.9m, to the Partnership for the storage and transportation assets and railcar leases. In addition, Green Plains Inc. and the Partnership agreed to extend the storage and throughput services agreement an additional three years to June 30, 2028.

The quarterly minimum volume commitment associated with the storage and throughput services agreement will be 235.7 million gallons or, approximately 80 percent of the new Green Plains Inc. annual production capacity of 1.183 billion gallons.

Both transactions are anticipated to close during the fourth quarter of 2018. These purchase agreements are subject to customary closing conditions, regulatory approvals and contain normal and customary representations, warranties, and indemnification obligations.

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15th October 2018

15th October 2018