Biox, World Energy JV closes on acquisition of 90 MMgy plant

By Biox Corp. | July 01, 2016

A 50/50 joint venture between Biox Corp. and World Energy announced June 30 that it has closed on the acquisition of a 90 MMgy biodiesel production facility in Houston, Texas. Each company has committed $10 million to the World Energy Biox Biofuels joint venture.

The facility, formerly known as Green Earth Fuels, is located within the Kinder Morgan Liquids terminal on the Houston Ship Channel and is the third largest biodiesel production facility in North America. The plant acquisition was slated to end by June 30. Plant commissioning and start-up will ramp up over the third quarter of the year.

“This joint venture with World Energy and the acquisition of a 90 MMgy facility provide Biox an opportunity to significantly expand and diversify our production capacity in combination with a high-quality partner,” said Alan Rickard, Biox CEO. “It is a large-scale asset that is well-positioned to supply biodiesel for compliance with the federal renewable fuel standard (RFS) in the U.S. market. As we see the distribution of our products from our facilities in Ontario shifting from the U.S. market to fulfill the mandates under Ontario’s Greener Diesel initiative, this acquisition provides us with a strategically positioned production facility from which we can address the U.S. market in partnership with World Energy. World Energy’s approach to sales and marketing is aligned with ours, as trusted producers and marketers that leverage their expertise, experience and relationships in the industry to provide optimal value to clients.”

“World Energy and Biox have been biodiesel industry pioneers dating from the very beginnings of the industry,” said Gene Gebolys, CEO of World Energy. “This venture enables us to lever our collective strengths to serve customers better than ever before with unparalleled logistical access by rail, truck, barge, ship, and pipeline to the biggest biofuels markets in the U.S. and beyond.”

In order to fund its $10 million contribution to the joint venture, Biox has secured a funding commitment from a group of its existing shareholders comprising Clearwater Fine Foods Inc., T. Robert Beamish and William Lambert. Beamish and Lambert are also directors of Biox. CFFI will provide a six month, secured bridge loan for $5 million. In addition, three financiers will subscribe for 5,000 units of Biox for gross proceeds of $5 million, with each unit consisting of a secured note in the principal amount of $1,000 and 880 common share purchase warrants exercisable at a price of $0.673 per common share (being 125% of the volume weighted average trading price for the common shares of Biox on the Toronto Stock Exchange for the five-day period ended on June 24). The bridge loan and the private placement were approved by the independent members of the board. Material terms of these financings are as follows:

-Both the bridge loan and the notes provide for voluntary prepayments without premium or penalty.

-Neither the bridge loan nor the notes are convertible, directly or indirectly, into equity or voting securities of Biox or any of its subsidiaries, or otherwise participating in nature; or repayable as to principal or interest, directly or indirectly, in equity or voting securities of Biox or any of its subsidiaries.

-The bridge loan and the notes will be secured by a pledge of the interest held by a wholly owned subsidiary of Biox in the joint venture company formed to complete the acquisition of the Houston facility.

 -The notes will have an initial six-month term that will be automatically extended to June 30, 2018, if shareholders approve the warrants as discussed below.

-The bridge loan will bear interest at a rate of 12 percent per annum from the date of advance to Aug. 31, 2016, at 14 percent from Sept. 1, 2016, to Sept. 30, 2016, at 16 percent from Oct. 1, 2016, to Oct. 31, 2016, and at 18 percent thereafter, payable monthly in arrears.

-The notes will bear interest at a rate of 12 percent per annum payable quarterly in arrears.

Biox will convene a special meeting of shareholders to be held not later than Dec. 31, 2016, to seek approval of the warrants by shareholders other than the three financiers listed above. Until this disinterested shareholder approval is obtained, the warrants are not transferable or exercisable. If the warrants are not approved, then:

-the warrants will terminate automatically.

-Biox will be obligated to pay an exit fee at the time the bridge loan is repaid in an amount equal to 2 percent of the face amount thereof if paid on or before Sept. 30, 2016, or 3.5 percent of the face amount thereof if the bridge loan is repaid after Sept. 30, 2016.

-Biox will be obligated to pay an exit fee at the time the notes are repaid in an amount equal to 2 percent of the face amount thereof if paid on or before Sept. 30, 2016 or 5 percent of the face amount thereof if the bridge loan is repaid after Sept. 30, 2016.

With the establishment of the World Energy Biox joint venture, the board of directors of Biox has accepted the request of Robert Beamish to retire from the board. To fill the vacancy created by Beamish’s retirement, the board has appointed Gene Gebolys, CEO of World Energy, effective as of the closing of the transaction. In addition, the board of directors has determined that it is an appropriate time to appoint Alan Rickard, the CEO of Biox, to the board of directors.

“Mr. Beamish has provided a tremendous amount of experience and valuable advice as a member of the Board during the past nine years,” said Kevin Golding, chair of Biox. “On behalf of everyone at Biox, I would like to thank him for his service. With this first direct investment in the U.S. market, the board concluded that Mr. Gebolys’ unique perspective on the U.S. market would provide invaluable insight to the board, while helping to unify the strategic direction of the joint venture with Biox’s plan for growth. Gene and Alan bring a great deal of industry experience from both a market and operations perspective.”

Since 1996, Gebolys has championed biodiesel’s development in the U.S. and throughout the world. He founded World Energy in 1998 which emerged to become an enduring and innovative force in the advanced biofuels industry over two decades. He was the founding chairman of the National Biodiesel Political Action Committee and was a founding commissioner of the National Biodiesel Accreditation Commission (BQ-9000). He was chair of the National Biodiesel Board’s Regulatory Committee for five years during the establishment of the industry’s most critical public policy supports including the establishment of the biodiesel blenders tax credit and RFS1 and RFS2. He now co-chairs the industry’s RFS Task Force that he has chaired since its inception in 2009.

Rickard has served as CEO of Biox since October. Rickard has more than 15 years of experience in the agri-food, energy and renewable fuels sectors. Prior to joining Biox he served as vice president of commercial operations-Canada at Rothsay, a division of Darling International Canada Inc., and previously at Maple Leaf Foods Inc. in increasingly senior positions between 2001 and 2013.

World Energy is an advanced biofuels supplier based in Boston with more than 200 million gallons of production capacity in Pennsylvania, Georgia, Mississippi, and Texas and more than 16 million gallons of biofuels storage servicing major markets in North America and beyond.

Biox is a renewable energy company that owns and operates approximately 450 million litres of nameplate biodiesel production capacity at plants located in southern Ontario and Houston, Texas. Biox has an innovative, proprietary and patented production process that is capable of producing the highest quality, renewable, clean burning and biodegradable biodiesel fuel utilizing a variety of feedstocks—from pure seed oils to animal fats to recovered vegetable oils with no change to the production process. Biox’s high-quality biodiesel fuel meets North American quality standards. 

 

 
 
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