NTR in $60m US ethanol merger


NTR plc - through its North American ethanol business, VBV LLC (VBV) - has entered into a definitive merger agreement with Green Plains Renewable Energy, Inc. (GPRE) that will create one of the largest ethanol companies in the industry.

The production capacity of the combined company will exceed 300 million gallons of ethanol per year. The transaction is subject to various shareholder approvals and customary lender and regulatory consents.

NTR plc further confirms that it has acquired the shareholding of Virgin in VBV (Virgin Biofuels). Upon closing, VBV will be merged into GPRE.

As part of the merger transaction, NTR plc will invest a further $60 million cash in GPRE.

VBV currently holds a majority interest in two ethanol plants - Indiana Bio-Energy, of Bluffton, Indiana and Ethanol Grain Processors, of Obion, Tennessee. Both plants are currently under construction and are expected to be completed in the Autumn of 2008. Once operational, the plants will produce a minimum of 100 million of gallons of ethanol each per year.

“The announcement today marks a further significant development for NTR” - said Jim Barry, Group Chief Executive, NTR. “In recent weeks, we have announced major initiatives in both the solar and wind energy sectors in the United States (Click Here). The opportunity presented by GPRE further extends our footprint in the North American renewable energy market.”

Jim Barry added - “The merger proposal matches two progressive ethanol producers, creating a solid platform for future growth. More importantly, it assembles a management team of unparalleled talent, leadership ability and commodity expertise. By combining operations and management, together with the additional capital, opportunities for industry consolidation should emerge.”

“The proposed merger will create one of the nation’s largest ‘pure play’ publicly traded ethanol companies, based on projected year-end operating capacity" - said Wayne Hoovestol, Green Plains’ chief executive officer. “Both companies will benefit from the increased scope, scale and critical mass afforded by this merger proposal, which should substantially increase revenues, add value to existing enterprises and create new opportunities for growth. We are stronger and more diverse as a combined company and we believe this is in the best interest of all stakeholders.”

“VBV and Green Plains share a common philosophy and vision - said Todd Becker, VBV’s chief executive officer. “Both companies believe that vertical integration is the best strategy to minimise risk, reduce cost and increase efficiency. We both also share an aggressive strategy for growth through acquisitions. This merger proposal is the product of our common goal to grow our business and enhance shareholder value over the long-term.”

“With the addition of VBV’s production capacity and capital resources, Green Plains is well positioned for strategic growth in the ethanol industry” - said Becker. “This merger is an important first step in building a second generation ethanol company to compete in the global market.”

Transaction Structure
Upon closing, VBV, Indiana Bio-Energy and Ethanol Grain Processors will be merged into Green Plains. Current equity holders of VBV, IBE and EGP will receive a total of 11,139,000 shares of Green Plains’ common stock.

VBV’s equity holders are NTR plc and Wilon Holdings S.A. Simultaneous with the closing of the merger, VBV’s equity holders, led by NTR plc, will invest $60 million in Green Plains’ common stock at a price of $10 per share - or an additional 6 million shares. This additional investment is expected to be used for general corporate purposes and to finance future acquisitions.

At current market prices, the transaction is valued at approximately $383 million, which includes approximately $212 million for the completion of plant construction, the $60 million equity investment and $111 million in new equity issued.

Pursuant to the terms and conditions of the merger, the combined company will be governed by a nine-member board of directors. NTR shall have the right to designate four individuals to the board.