By PETER HUSSMANN
Unit holders of Central Iowa Energy, the financially-troubled Newton biodiesel plant, agreed on Wednesday to sell virtually all of the company's assets and liabilities to Renewable Energy Group of Ames as part of an asset purchase agreement first proposed last May.
In addition, unit holders of the company that has lost $14.9 million from operations since commencing biodiesel production in 2007 have agreed to dissolve the company as soon as reasonably practicable following the completion of the sale.
More than 80 percent of the share votes cast approved the proposals, according to a Securities and Exchange Commission filing issued after the close of the markets today.
Under the consolidation agreement, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of 4.4 million shares of common stock and 164,000 shares of preferred stock in the new company being formed by the consolidation. However, plans call for shares to be used to satisfy outstanding claims owed by Central Iowa with proportionate distribution of the new company's shares made only after those claims are satisfied. Upon closing, Central Iowa unit holders will hold in aggregate 1.2 percent of the new company's preferred stock and 11.8 percent of its common stock shares.
In addition to assuming control of Central Iowa, REG is also involved in proposals to assume control of two other biodiesel plants, Western Iowa Energy in Wall Lake and Blackhawk Biofuels in Danville, Ill. REG currently manages the operations of all three plants. REG hopes to have all the agreements in place by the end of February.
The Iowa Power Fund recently approved a $3.8 million grant that will aid Elevance Renewable Sciences, an Illinois company working in conjunction with REG, to add test technology to the Newton biodiesel plant to turn feedstock oils and animal fats into specialty chemicals and jet fuels.
The state grant is in addition to a $2.5 million U.S. Department of Energy grant previously announced for development of the pilot project at the Newton plant.
A copy of the release on the asset purchase sale posted on the Central Iowa Energy Web site can be read here.
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