Ethanex Energy Plans to Acquire 111 Million Gallon Ethanol Plant
Ethanex Energy, Inc, a development stage company planning to engage in the ownership and operation of ethanol plants as well as development and sales of low-cost ethanol production technology, today announced that it has entered into a letter of intent to acquire an ethanol plant located in Sutherland, Nebraska from Midwest Renewable Energy, LLC (MRE).
The facility currently produces 26 million gallons per year (MGY) and is undergoing a two-phase expansion. Each phase is planned to add an additional 42.5MGY of production capacity to the plant, which would bring the plant's total capacity to 111MGY upon completion. The first phase of the expansion is scheduled to commence operation during the third quarter of 2008, and the second phase is scheduled to become operational in the first quarter of 2009.
"This acquisition will transform our company. It will provide Ethanex with immediate production and revenue at a cost that we believe is below that of building a new facility," said Al Knapp, President and Chief Executive Officer of Ethanex
. "This facility will also serve as a showcase to demonstrate our fractionation platform. We expect that sales of integrated fractionation systems to third parties will become an additional avenue for our company's growth in the future."
Ethanex plans to add its integrated fractionation platform to the plant in order to increase efficiency and profitability. Ethanex has developed the fractionation system in collaboration with Buhler, Inc., a technology group and global market leader in grain milling, food processing, chemical process engineering and die casting. Based on the anticipated timing of the acquisition and the planned plant expansion, Ethanex said it expects the fractionation mill would become operational in the third quarter of 2008, in conjunction with the startup of the first phase of the plant's expansion. Ethanex estimates that the increase in production that will result from the use of fractionated feedstock will allow for increased plant capacity up to approximately 79MGY after the first phase of expansion and to approximately 128MGY when the plant expansion is complete.
"We are excited to be working with MRE on this important transaction. The performance results achieved at Sutherland have exceeded industry averages in both energy consumption and production yield," said Mr. Knapp. "Our companies share a belief that significant efficiencies can be brought to corn ethanol production to make it more environmentally friendly and profitable."
"We look forward to joining a company of talented individuals that share our vision of efficient, responsible, and successful production of ethanol and unique, value-added by-products," said Jim Jandrain, Chief Financial Officer and board member of MRE
. "The complementary technologies within our companies will give us a competitive advantage that is essential in the ethanol industry today and into the future."
In light of the opportunity, size and timing of the MRE transaction, Ethanex will defer efforts to seek financing for the construction of its planned projects in southern Illinois or northeast Kansas. Ethanex said that it expects pre-construction development work to continue at those sites to facilitate the possible financing and construction of the two facilities in the future, contingent upon market conditions.
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