Green Plains Sells Three Ethanol Plants to Valero

Green Plains ethanol facility in Superior, Iowa ( Green Plains )

Green Plains announced it will sell its ethanol plants in Lakota, Iowa, Bluffton, Ind. and Riga, Mich. to Valero Renewable Fuels. The company will receive $300 million in cash plus approximately $28 million of working capital, also paid in cash.

“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 CEO of Green Plains in a recent press release. The transaction includes 20% of the company’s reported ethanol production capacity—or 280 million gallons of nameplate capacity.

In addition, Green Plains also entered into an asset purchase agreement with Green Plains Partners LP (Partnership) to gain their storage and transportation assets and the assignment of railcar leases with the Lakota, Bluffton and Riga ethanol plants. Green Plains will exchange $120.9 million worth of units it owns of the Partnership, to the partnership for the storage and transportation assets as well as railcar leases. In total it’s approximately 8.9 million units.

"Exchanging a portion of Green Plains Inc.'s ownership in the Partnership to acquire the three ethanol facilities' storage assets from Green Plains Partners is highly beneficial to both parties. For Green Plains Inc., it maximizes the cash proceeds from the sale of the three ethanol facilities and reduces the associated minimum volume commitment throughput of ethanol production. For Green Plains Partners, it lowers the distributable cash flow needs, enabling us to maintain the current annual distribution, making for an accretive transaction for the Partnership unitholders," Becker stated.

Minimum volume commitment for storage and railcar agreements is 235.7 million gallons—about 80% of the new Green Plains’ annual production capacity of 1.183 billion gallons.

Both transactions are set to close the fourth quarter of 2018.