Under the agreement, several newly formed, wholly owned subsidiaries of Ethanex will acquire substantially all of the assets, and assume certain liabilities, of Midwest in a series of three transactions.
Ethanex will acquire the existing ethanol plant for $50 million in cash. The existing plant, which has a production capacity of 26 million gallons per year (MGY), is currently undergoing a two-phase expansion.
Each expansion phase is designed to add an additional 42.5MGY of production capacity, for a total projected plant capacity of 111MGY. At each of the three closings Ethanex will receive $2 million of inventory which is included in the purchase price.
Ethanex will build and add its integrated fractionation platform, developed in collaboration with Buhler, to the plant. The agreement contemplates that the fractionation platform will commence operation at the time Ethanex acquires the first expansion phase of the Sutherland plant, estimated to occur during the last quarter of 2008.
Ethanex estimates that the fractionation platform will enable total plant capacity to be approximately 132MGY upon completion of the project. Co-products will include high-protein distiller’s grains, food-grade crude corn oil as well as corn gluten feed.
