Flint Hills Resources announced today plans to acquire the Hawkeye ethanol plants in Menlo and Shell Rock, Iowa. On August, 16, 2010, Flint Hills Resources signed an agreement for the purchase of the plants with The Royal Bank of Scotland plc.
The Menlo and Shell Rock ethanol plants opened in 2008. The plants each employ about 50 people and each produces about 110 million gallons of ethanol annually.
“This is an exciting opportunity for our company,” said Brad Razook, president of Flint Hills Resources. “These are high-quality, second-generation ethanol plants that are well-positioned to serve major U.S. fuels markets.”
“Both Menlo and Shell Rock have highly valued, professional workforces, which was an important aspect of our decision to acquire these facilities,” Razook said.
No purchase price was disclosed; the sale is expected to close in September.
Flint Hills Resources, a leading producer of transportation fuels in the Upper Midwest, already has a significant presence in Iowa. The company distributes refined fuels throughout the state and owns a fuel terminal in Bettendorf, Iowa. Flint Hills also operates asphalt plants in Algona, Davenport and Dubuque.
In addition, Flint Hills Resources is an independent subsidiary of Koch Industries, Inc., which, according to Forbes magazine, is one of the largest private companies in the world. The company, through its subsidiaries, has several pipeline, manufacturing and fertilizer assets in Iowa.
Flint Hills is the largest purchaser of ethanol in Minnesota, where it has utilized ethanol and other biofuels in its fuel distribution system since the mid-’90s. The company produces transportation fuels such as gasoline, diesel, and jet fuel at its 320,000-barrel-per-day refinery outside of St. Paul, Minn. Flint Hills also owns and operates refineries in Texas and Alaska.
“This acquisition enhances our base business and allows us to compete more completely in the fuels market,” Razook said. “It puts us in position to create value for our customers in a segment of the fuels market that is becoming increasingly important.”
Flint Hills Resources’ commitment to safety and environmentally responsible operations will extend to the Menlo and Shell Rock plants. “As with all of our facilities, our top priorities for these plants will be their safe and responsible operation,” Razook said.
Flint Hills will conduct a full evaluation of each plant’s operations, but the company does not anticipate making any immediate changes.
Both plants were originally owned by Hawkeye Growth. The Royal Bank of Scotland is collateral agent for the senior secured lenders to the owner of the plants. The Royal Bank of Scotland was advised on this transaction by Carl Marks Advisory Group, LLC and, on legal matters, by Latham & Watkins LLP.
Source : Press Release