Ocean Park Advises Green Plains on Sale of Hereford Ethanol Plant
December 17, 2020 – Green Plains Inc. (“Green Plains”) announced on December 15, 2020, that its subsidiary, Green Plains Hereford LLC, entered into an asset purchase agreement with Hereford Ethanol Partners, L.P. to sell its 100 million gallon ethanol plant located in Hereford, Texas for $39 million. In addition to the initial purchase price, the buyer will purchase existing working capital and include an earnout provision of up to $75 million related to certain value enhancement opportunities, including future earnings from California’s Low Carbon Fuel Standard credits.
Ocean Park acted as exclusive financial advisor to Green Plains on the transaction.
In consideration for the assets, Green Plains Hereford LLC has entered into an earnout agreement with Hereford Ethanol Partners, L.P. to accelerate the consummation of known carbon sequestration opportunities. Green Plains will receive a share of any future earnings related to carbon capture and sequestration and other considerations, estimated to be $7.5 million annually for a period of 10 years as determined by the earnout agreement. The sharing agreement will begin with the first full quarter following completion of upgrades to the biorefinery, which are expected to take approximately 24 months from close.
“The sale of the Hereford ethanol facility allows us to reallocate capital to support the accelerated buildout of our Ultra-High Protein technology and continue our total transformation to an ag-tech focused company,” said Todd Becker, president and chief executive officer. “We determined that this location was not optimal for our growing focus on sustainable proteins and novel ingredients and were pleased to find a partner interested in pursuing several identified carbon capture opportunities. In addition, this location can be further optimized to lower carbon intensity scores which will benefit our shareholders in the future, if and when realized.”
While the Texas ethanol plant is changing hands, it will continue producing renewable fuel during 2021 while implementing a number of upgrades to the facility which are expected to take about two years to complete. The move comes as demand for low carbon fuels grows nationwide.
“We are pleased to advise on this important transaction and appreciate our long-standing relationship with Green Plains,” said Mark Fisler, Ocean Park managing director. “This transaction marks the thirty-first successful biofuels transaction for Ocean Park, which further solidifies our position as a leading advisor in the renewable fuels and chemicals industries.”
Green Plains Inc. (NASDAQ:GPRE) is a diversified commodity-processing business with operations that include corn processing, grain handling and storage and commodity marketing and logistics services. The company is one of the leading corn processors in the world and, through its adjacent businesses, is focused on the production of sustainable biofuels and sustainable high protein and novel feed ingredients. Green Plains owns a 48.9% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. For more information about Green Plains, visit www.gpreinc.com.
Hereford Ethanol Partners, L.P. is a newly formed, wholly owned subsidiary of a privately-held Texas investment group that has maintained strategic investments in agriculture and energy infrastructure and operations for over 50 years. It is expected that the facility will resume production in Q2 2021.
Ocean Park is a leading boutique investment bank focused on the renewable fuels, energy, food, AgTech and agribusiness sectors. The Ocean Park team has significant operational and transaction experience, including advising on mergers and acquisitions, financings and restructurings. Since its founding in 2004, Ocean Park has successfully completed over 80 transactions and client engagements. Its professionals are based in Los Angeles, Houston and Omaha. For more information, please visit oceanpk.com or call (310) 670-2093.