By MICHELE F. MIHALJEVICH

Indiana Correspondent

OMAHA, Neb. — Green Plains, Inc. has sold three ethanol plants in Indiana, Iowa and Michigan and may sell 1-3 additional facilities, according to company officials.

The plants in Bluffton, Ind., Lakota, Iowa, and Riga, Mich., were sold to Valero Renewable Fuels Co. LLC for $319 million in cash, Green Plains said. Sale proceeds will allow Green Plains to pay down term debt, said Todd Becker, company president and CEO.

“The sale of these three ethanol plants demonstrates our commitment to strengthening our balance sheet and unlocking value for our shareholders,” he explained. “As we stated in May, when we outlined our Portfolio Optimization Program, we would divest assets that enable us to execute our long-term strategic objectives.

“This sale is the first step toward our strategic objectives to prove the value of our assets and to significantly reduce or eliminate term debt by the end of 2018.”

The transaction was announced Oct. 10 and the sale closed Nov. 15. “We carefully laid out our strategy that the plants we may divest would be locations that were limited in their export capability and/or not a good candidate for the high-protein feed technology we are investing in,” noted Jim Stark, Green Plains spokesperson.

The company has said publicly it may sell a total of 4-6 ethanol plants, he added. Green Plains also recently announced it has sold the vinegar company it owns.

Green Plains also stated Nov. 15 it would permanently close its Hopewell, Va., ethanol facility. The plant had an annual capacity of 60 million gallons. Most of the equipment will be transferred to other company facilities, Green Plains said.

The three plants sold to Valero represent 280 million gallons of nameplate capacity, or about 20 percent of the company’s reported ethanol production capacity, Green Plains said. It has 13 ethanol plants remaining, including those in Madison, Ill., Mount Vernon, Ind., Shenandoah and Superior, Iowa, and Obion, Tenn. The 13 facilities have a total production capacity of about 1.1 billion gallons yearly.

Before the sale, Valero, based in San Antonio, Texas, owned 11 ethanol facilities, including seven in the region – Linden and Mount Vernon, Ind., Albert City, Charles City, Fort Dodge and Hartley, Iowa, and Bloomingburg, Ohio. The company’s production capacity is about 1.7 billion gallons annually.

A Valero spokeswoman did not return a call seeking comment.

Green Plains will also purchase storage and transportation assets, along with the assignment of railcar leases associated with the three plants it is selling, from Green Plains Partners LP. The entities have agreed to extend the storage and throughput services agreement to June 30, 2028.

“Exchanging a portion of Green Plains, Inc.’s ownership in the partnership to acquire the three ethanol facilities’ storage assets from Green Plains Partners is highly beneficial to both parties,” Becker said. “For Green Plains, Inc., it maximizes the cash proceeds from the sale of the three ethanol facilities and reduces the associated minimum volume commitment throughput of ethanol production.

“For Green Plains Partners, it lowers the distributable cash flow needs, enabling us to maintain the current annual distribution, making for an accretive transaction for the partnership unit holders.”