Biodiesel firms plan IPOs

By Jerry W. Kram | September 04, 2007
Hamilton, Ontario-based Biox Corp. and Ralston, Iowa-based Renewable Energy Group Inc. (REG) have announced plans for initial public offerings (IPOs) of stock to the public. The companies each seek to raise $150 million of capital.

Biox is a leading producer of biodiesel in Canada. Its plant in Hamilton began production in late 2006 with a capacity of 15.8 MMgy. The company has plans to build additional plants in Hamilton and Montreal, and two plants in the United States. If successful, these plants would have a combined capacity of about 70 MMgy. "Biox has been a leader in the development of the biodiesel industry in Canada," said Kory Teneycke, executive director of the Canadian Renewable Fuels Association. "We believe Biox going public is a sign of the progress this industry is making, going from something that was an idea to something that is a permanent part of our fuel mix in Canada. The difference between now and after Biox's IPO is that Canadians who are interested in owning a part of this industry will have one more opportunity to do so."

Teneycke believes that Biox is the first Canadian biodiesel company to go public. There are just a few other public companies in the biofuels industry in Canada, including SunOpta Inc. in Brampton, Ontario, and Lignol Energy Corp. in Vancouver, British Columbia.

Teneycke said this is an exciting time for the biodiesel industry in Canada as the government is preparing to mandate a 2 percent biodiesel blend nationwide by 2012, if not sooner. That would create a 600 million-liter (158.5 million-gallon) market for biodiesel. "Biox is the largest biodiesel producer in Canada today," Teneycke said. "We expect them to continue to play a leadership role in servicing that market."

REG operates a 12 MMgy plant in Ralston and operates four other biodiesel plants: SoyMor Biodiesel in Glenville, Minn.; Western Iowa Energy in Wall Lake, Iowa; Central Iowa Energy in Newton, Iowa; and Iowa Renewable Energy LLC in Washington, Iowa. REG has an agreement to purchase finished biodiesel with Peter Cremer Inc. It also has two 60 MMgy plants under construction in Louisiana and Kansas, and another proposed plant under development in Illinois. The company is a major marketer of biodiesel in the United States. It markets its fuel under the SoyPower brand, which is BQ-9000 certified.

According to the company's filing with the U.S. Securities and Exchange Commission (SEC), REG is looking to expand and diversify its options for transporting and distributing biodiesel. It is specifically developing its facilities where multiple forms of transport are available. "We intend to further enhance our distribution capabilities by constructing facilities near deep-water distribution hubs, including New Orleans, which has direct access to the Gulf of Mexico, and Cairo, Ill., which has direct access to the Mississippi River," according to the SEC filing. The filing also described the company's plans for future biodiesel facilities on the East and West coasts of the United States.

REG will also use the proceeds from the IPO to finance its future expansion plans. The company listed the cost of its three plants under construction or development as approaching $248 million.

Credit Suisse Securities is the lead underwriter for REG's IPO with Banc of America Securities, Goldman Sachs and Thomas Weisel Partners underwriting the offering. REG will list its shares on the New York Stock Exchange under the symbol RWE.
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