GPRE to merge with VBV LLC and its subsidiaries

By Bryan Sims | April 08, 2008
Web exclusive posted May 8, 2008 at 4:46 p.m. CST

Where consolidation and integration is seemingly an inevitable occurrence in the attempt to shore up the ethanol supply and value chain, one of the major players in the industry is looking to do just that. Green Plains Renewable Energy Inc. and VBV LLC, with its subsidiaries, have entered into a definitive merger agreement. Upon closing, the combined company would fall under the GPRE name and have an expected combined operating capacity of 330 MMgy.

According to Scott B. Poor, corporate council director of investor relations for GPRE, the proposed merger still requires shareholder approval, equity approvals and other customary lender and regulatory consents. The deal is expected to be accretive to GPRE's earnings beginning in fiscal year 2009. The transaction is anticipated to close by late summer this year, Poor said.

"This is a marriage between two companies that share the same philosophy and goals," he said. "There's a great deal of enthusiasm for integration and consolidation in the industry. As a result of this deal, we're going to be in a very good position to be a consolidator in the industry."

Poor did not disclose any long-term plans, but conceded that the immediate goals for merged companies are to complete construction on a GPRE facility and two VBV ethanol plants. VBV holds majority interests in two companies that have ethanol plants under construction: Indiana Bio-Energy LLC in Bluffton, Ind., and Ethanol Grain Processors LLC in Obion, Tenn. Both plants are expected to be completed in the fall. Once operational, the plants are expected to each produce up to 110 MMgy. VBV has also announced plans to develop an ethanol blending and distribution business.

Meanwhile, GPRE expects to complete construction on its 50 MMgy facility near Superior, Iowa, later this spring.

Upon the merger agreement's closing, current equity holders of VBV, Indiana Bio-Energy and Ethanol Grain Processors will receive GPRE's common stock and options totaling 11,139,000 shares. VBV's equity holders include subsidiaries of NTR plc, an international renewable energy and sustainable waste management company, and Wilon Holdings S.A., a Switzerland-based investment group.

Upon closing, Wayne Hoovestol will remain chief executive officer of GPRE for a transition period of up to one year. VBV's CEO Todd Becker will initially serve as GPRE's president and chief operating officer, and then become GPRE's CEO. These appointments are subject to the discretion of GPRE's board of directors. Employees of both companies will be integrated into the combined company. GPRE's corporate headquarters will remain in Omaha, Neb., and continue to trade under its existing ticker symbol, "GPRE".

To listen to GPRE's conference call announcement of the merger, visit http://www.gpreinc.com/.