Agri-Source Fuels retains M&A firm to find biodiesel plant buyer

By Ron Kotrba | August 28, 2012

After filing for Chapter 11 bankruptcy protection earlier this month, Agri-Source Fuels LLC has retained Easton, Md.-based Equity Partners CRB to find a buyer for its biodiesel refinery in Dade City, Fla. 

The facility is the former Lykes-Pasco juice plant, complete with 5.2 million gallons of liquid storage, which is what Agri-Source Fuels said originally attracted it to the plant in 2007. Agri-Source Fuels said it invested millions of dollars to retrofit the plant to produce biodiesel and glycerin, but the investment created a debt load that the business could no longer support. It filed for bankruptcy protection Aug. 8.

“The bankruptcy filing will allow Agri-Source to cleanse the asset and either restructure or sell to another operator,” said Matt LoCascio, managing director at Equity Partners. “The refinery’s location and existing infrastructure makes for an attractive acquisition opportunity for someone already in the business or as an entry platform into this rapidly growing, high-upside industry.”  He said there is an Oct. 19 bid deadline and the auction will take place Oct. 22.

The plant is only refining glycerin at this time, producing 1.8 MMgy of 99.7 percent pure USP grade. Additional retrofitting and improvements would be required to restart the plant’s 12 MMgy of biodiesel productive capacity.

Agri-Source Fuels CEO, Rodney Sutton, said, “This is the perfect time to purchase the refinery and make the necessary investment to bring it back on line. Florida’s fuel consumption is the third highest in the country; biodiesel will be an important part of the state’s future.”

The recent passage HB 7117 in Florida contains several measures aimed to encourage the development and expansion of the renewable energy sector within the state, including biofuels production and distribution. Under the legislation, a sales tax exemption is established for materials used in the distribution of B10-B100, E10-E100 and other renewables. According to a copy of the bill published by the state legislature, this includes fueling infrastructure, transportation and storage materials. The legislation also establishes an investment tax credit related to biofuels production. Under the bill, the credit can apply to up to 75 percent of all capital costs, operation and maintenance costs, and research and development costs that are incurred between July 1, 2012, and June 30, 2016. The credit can be claimed for activities related to the investment in production, storage and distribution of B10-B100, E10-E100 and other renewable fuel within the state. This includes costs related to construction, installation and equipment.

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