Noble to sell US ethanol plant to new buyer for higher price

By Tim Albrecht | December 08, 2017

Noble Group Ltd. announced today a new buyer of Noble Americas South Bend Ethanol LLC, a subsidiary that owns and operates an ethanol production plant in South Bend, Indiana. Noble entered into a purchase agreement with Mercuria Investments US Inc. for a base consideration of $15.5 million—$3 million more than its previous agreement with Zeeland Farm Services Inc.

Noble originally agreed to sell the South Bend plant to family-owned Zeeland Farm Services on Nov. 24, at a base consideration of $12.5 million plus the net working capital, $900,000, and inventory value, $3.6 million, of NASBE, which is a gross value of about $17 million.

In a Singapore Exchange filing Friday, Noble announced it entered into a new purchase agreement with Mercuria Investments, a unit of Mercuria Energy, with the same terms as the Zeeland Farm deal, but at a base consideration of $15.5 million, with a total consideration of $20 million.

It is expected that Noble will terminate its agreement with Zeeland Farm on Dec. 11 and take on a $2 million termination fee.

As of Sept. 30, the book value of NASBE was approximately $80.4 million. Based on its current deal with Mercuria, Noble will record a loss of about $60.3 million on the sale.

The sale of NASBE is in relation to the divestment of Noble’s global oil liquids business, Noble Americas Corp., to Vitol U.S. Holding Co. for $1.4 billion. In October, Noble also sold Noble Americas Gas & Power Corp. to Mercuria Energy for $102 million. Vitol agreed that Noble can sell NASBE before the closure of the NAC transaction. The deal was part of Noble’s attempt to address its debt burden.

The ethanol plant, formerly owned by New Energy Corp., was idle for more than a year before a re-construction in 2014. NASBE acquired ownership of the plant in July 2013 from auction liquidators.