Despite the known problems of ethanol, ethanol lives! After the closing bell on Tuesday came word that Green Plains Renewable Energy, Inc. (NASDAQ: GPRE) has entered into a definitive agreement to acquire Global Ethanol, LLC. Green Plains estimates the total value of the transaction at approximately $169.2 million, which includes about $147.6 million for the ethanol production facilities and the balance in working capital.
Global Ethanol owns two operating ethanol plants located in Lakota, IA and Riga, MI. The combined production capacity for both is about 157 million gallons per year.
Green Plains claims that this will boost its capacity by 31% to approximately 657 million gallons per year. Green Plains also believes that it will market and distribute more than one billion gallons of ethanol production per year after the transaction closes.
Upon closing of the merger, the outstanding units of Global will be exchanged for $20 million in cash, as well as 4,386,027 shares of restricted common stock of Green Plains and warrants to purchase 700,000 shares of restricted common stock of Green Plains. The total listed value of the transaction also includes the assumption of some $98.7 million in Global Ethanol’s outstanding debt.
The warrants will not be transferable, except in certain limited circumstances, and will be exercisable for a period of three years from the closing date at a price of $14.00. While the warrants require upside to have any real value, the upside expectations are not off the chart.
That v$14.00 warrant strike price compares to a close on Tuesday of $11.69 after a 7.4% gain on the day. The 52-week trading range is also $6.50 to $17.97.
JON C. OGG
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
