NEW YORK -- Xethanol Corporation has organized BlueRidgeXethanol LLC to spearhead Xethanol's expansion into the Carolinas.

BlueRidge has entered into a definitive agreement to acquire its first production plant -- a former medium-density fiberboard factory in Spring Hope, N.C. The plant has an excellent existing infrastructure that can readily be converted to production of ethanol. It will be re-engineered to support a 35-million-gallons-per-year plant.

The material terms of the matters described above will be disclosed in a Current Report on Form 8-K to be filed by Xethanol with the U.S. Securities and Exchange Commission.

The company, presently known as Carolina Fiberboard, will become a wholly owned subsidiary of BlueRidge and change its name to Spring Hope BioFuels, LLC. It is believed that this plant may well become the first commercial-scale cellulose ethanol plant to come on line in the U.S.

The production facility consists of 200,000 square feet of factory buildings, located on a 212 acre site. It is anticipated that, after retrofitting the plant to produce ethanol, production will reach 5 million gallons per year in approximately 6 months and then progress rapidly to capacity. The primary feedstock of local hardwood chips and wood waste has already been established. Other lower cost feedstocks will eventually be integrated into the feedstock mix.

Xethanol plans to deploy established forest products processing technologies, leveraging the plant's existing pulp digesters. These powerful digesters are fed by a large scale, biomass pre-processing and preparation module that is in working order. Simple and proven dilute acid hydrolysis technology will be used to convert the cellulose to fermentable sugars. Enzymatic hydrolysis will progressively be introduced as it becomes economically feasible.

Christopher d'Arnaud-Taylor, chairman and CEO of Xethanol, stated, "Xethanol is extremely pleased to complete this transaction. With this acquisition, the company establishes a foothold in yet another vibrant region rich in forestry products and wood waste. We also inherit a talented and entrepreneurial management team capable of building out this facility as a prototype for others in the region. We believe that the technology that drives this plant will enable us to use feedstocks that are less expensive than corn and to efficiently convert local forest products to ethanol."

D'Arnaud-Taylor said, "This acquisition provides Xethanol the opportunity to re-invigorate a previously shuttered industrial facility, saving both time and money as we seek to achieve our ethanol production goals. The BlueRidge management team is a great addition to the Xethanol organization and we look forward to their leadership in getting Spring Hope into production as well as in targeting other regional opportunities. As always, we appreciate the support and enthusiasm of local government for our initiatives."

Vic Kramer, a principal of Carolina Fiberboard, said: "This is indeed a mutually beneficial alliance. Our combined resources will accelerate the production timetable to meet the burgeoning demand for ethanol. Our strategy of converting a dormant industrial facility near an abundant and renewable biomass feedstock is directly in line with Xethanol's continued philosophy. Our plant in Spring Hope, NC has installed equipment that is currently being upgraded with a plan to begin limited ethanol production in six months and establishes Spring Hope as the first commercial cellulosic ethanol plant in the U.S."

Xethanol Corporation's goal is to be the leader in the emerging biomass-to-ethanol industry. Xethanol's mission is to optimize the use of biomass in the renewable energy field and convert biomass that is currently being abandoned or land filled into ethanol and valuable co-products. In Iowa, Xethanol owns two ethanol production facilities, where it is deploying these technologies.

SOURCE: Xethanol Corporation via Business Wire.