Posted Oct. 27, 2010

China Integrated Energy Inc. closed on the acquisition of a newly constructed 50,000 metric ton (15 MMgy) biodiesel production facility from Chongqing Tianrun Energy Development Ltd. in Chongqing City, China. According to CIA, the newly-acquired plant is located adjacent to the company's existing 100,000 metric ton facility in Tongchuan City, Shaanxi Province, China. The company expects to conduct initial testing in December, followed by ramping up production.

"This acquisition will be accretive to our revenue and net income immediately," said CEO Gao Xincheng. "With our newly constructed 50,000 metric ton biodiesel production facility, which will come online later this year, we will double our biodiesel production capacity to 200,000 metric tons this year."

According to CIA, it paid approximately $16.5 million in cash from the $58.7 million it had in hand as of June 30 for the Chongqing Tianrun biodiesel plant. CIA anticipates that the acquisition could add approximately $32 million in revenue and $8 million in pretax income in 2011.

The newly acquired plant, according to CIA, will use first-generation biodiesel production technology, similar to the production process used in the company's existing 30 MMgy plant located in Shaanxi Province. With its expertise in production and its established distribution network, the company expects the new facility to achieve gross margins of approximately 30 percent.

"With continued government support for renewable energy sources such as biodiesel and strong domestic demand for energy, we are confident in generating strong earnings and cash flows over the next several years," Xincheng said.