By PETER HUSSMANN
Unitholders of Central Iowa Energy, the financially-struggling Newton biodiesel plant, met at Newton Senior High School Wednesday evening to hear a presentation on the proposal to consolidate the company with Renewable Energy Group of Ames.
Under the plan, REG will assume essentially all of Central Iowa's assets in exchange for the distribution of shares in the new company being formed by the consolidation. However, plans call for a portion of the shares to be used to satisfy outstanding claims owed by Central Iowa with distribution made to untholders only after those claims are satisfied.
The informational meeting was held in advance of a meeting set for Feb. 17 where Central Iowa unitholders will be asked to vote on the proposed consolidation with Renewable Energy and Central Iowa's subsequent dissolution and liquidation. The actions take separate votes of the shareholders.
A Securities and Exchange Commission filing today outlined information provided to Central Iowa unitholders at Wednesday's meeting. REG officials were on hand to provide an overview of the current state of the biodiesel industry, its strategy to continue as a leading manufacturer, marketer and distributor of biofuels and specialty chemicals, the benefits of the consolidation from an operations and management standpoint, cost advantages, access to capital and how the new operation would be structured.
An updated business-combination transaction communication concerening the consolidation was filed this afternoon.
In addition to Central Iowa's proposed consolidation with REG, plans call the Ames-based company to consolidate with two other biodiesel plants, Blackhawk Biofuels of Danville, Ill, and Western Iowa Energy of Wall Lake. Each of the company's are currently independently owned and governed but are managed by Renewable Energy Group.
The big news of the evening, however, was likely the Environmental Protection Agency's decision on Wednesday saying that soybean produced diesel counted as an advanced biofuel, a move that is expected to provide a boost to the struggling industry. Congress is also expected to act early this year to revive the $1-a-gallon tax credit on biodiesel production, a benefit that expired at the end of last year.
Since going on-line in 2007, Central Iowa Energy has lost $14.3 million from operations.
REG plans informational presentations with unitholders of Western Iowa Energy and Blackhawk Biofuels today. A meeting with REG shareholders on the consolidation plan is set for Saturday.
REG already has plans to retrofit the Newton biodiesel plant into a biorefinery demonstration facility. With the help of a $3.9 million grant from the Iowa Power Fund, REG plans to collarborate with Illinois-based Elevance and Technochem to demonstrate the ability to convert existing biodiesel facilities with bolt-on technology to produce diversified bio-chemical products, such as jet fuel, through the use of Iowa feedstocks.
You can read about the December announcement of the grant award here.
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