REG buying U.S. Biodiesel Group

Houston, Texas-based Renewable Energy Group (REG) has signed a purchase agreement with U.S. Biodiesel Group (USBG), a portfolio company of U.S. Renewables Group, a private equity fund that develops, acquires and manages renewable power and fuels projects.

Under the terms of the agreement, USBG plans to invest cash and merge its largest assets into REG, including its biodiesel production facility near Houston and a liquid storage terminal in California’s Central Valley.

“USBG’s 35 MGY biodiesel production facility near Houston, Texas and a liquid storage terminal location in California will offer REG access to strategic locations with deepwater, pipeline and rail accessibility,” said REG Chairman and CEO Jeff Stroburg.

While the deal is subject to regulatory approval, the two biodiesel companies said they anticipate closure in June.

Less than three months ago, the Houston biodiesel company dropped its $150 million initial public offering, citing current market conditions, but said it could undertake a “subsequent private offering” to raise cash (see Renewable Energy Group cancels IPO).

At the time, CFO Jeff Pattison explained that by pulling the IPO, the company would have more flexibility for it to “strategically grow the business.”

For REG, the IPO would have allowed an opportunity to put earnings from the share sale toward more plants.

Currently, REG claims a network of seven plants in production with a combined capacity of more than 220 million gallons annually.

According to the company, REG, USBG and other investors—which include Bunge, ED&F Man, Natural Gas Partners, NGP Energy Technology Partners, U.S. Renewables Group, and West Central—are working to build a comprehensive biodiesel production, marketing and service company.