14th Sep 2006 07:48
D1 Oils Plc14 September 2006 14 September 2006 D1 to Acquire Major Site for Biodiesel Production and Distribution on Merseyside Highlights • Major site at Bromborough in North West England to be acquired for conversion to biodiesel production, storage and distribution • Expected initial capacity of 100,000 tonnes from conversion of the site to biodiesel production in 2007 at an estimated capital cost that would be lower than full construction • Strategy to increase refinery capacity by a further 100,000 tonnes in 2008 • Refining operations anticipated to commence in 2007 subject to obtaining necessary consents • Purchase consideration of £3m • D1's total UK biodiesel production capacity anticipated to reach 420,000 tonnes by end 2008 In accordance with AIM Rule 12, D1 Oils plc (D1), the UK-based global producerof biodiesel, today announces that it has exchanged contracts to acquire a 47acre site at Bromborough on Merseyside for a second major biodiesel production,storage and distribution centre. Once operational the new site is expected havean initial production capacity of 100,000 tonnes from conversion of thefacilities to biodiesel production during 2007, with a further 100,000 tonnes ofplanned refinery capacity to be added in 2008. The site offers distributionaccess within a 70 mile radius to large UK urban markets in the North andMidlands, as well as seaborne delivery to potential UK west coast refinerycustomers and to Ireland. The Directors believe the acquisition should make D1 aleading supplier of biodiesel to the growing UK market. D1 currently has 32,000 tonnes of capacity at its Middlesbrough site and haspreviously announced its intention to increase total UK installed capacity to220,000 tonnes by the end of 2007. Combined with the planned production capacityfrom its Middlesbrough plant, the acquisition of the site has the potential toincrease D1's installed biodiesel production capacity to 320,000 tonnes by theend of 2007 and 420,000 tonnes by the end of 2008. The acquisition of the site is in line with D1's stated strategy of buildingcapacity to refine imported edible oil feedstocks until its own supplies ofcrude jatropha oil start to become available from 2008. The first 100,000 tonnesof new production capacity is to be obtained by re-engineering site facilitiesto refine vegetable oil into biodiesel. The additional 100,000 tonnes ofcapacity is to be added using D1's proprietary, modular refinery technology. TheDirectors believe that the site has sufficient area and facilities to expandproduction significantly. The existing infrastructure will also support theinstallation of pre-treatment facilities to allow processing of crude jatrophavegetable oil in 2008 at a reduced capital cost. The acquisition of the site from a subsidiary of The Lubrizol Corporation(Lubrizol) will be for cash consideration of £3m. It is expected that thepurchase consideration will be funded from both existing cash resources and anew mortgage facility, although the latter is not required for the acquisitionto proceed. Completion is expected by 31 December 2006. D1's intended strategy is to invest up to £8m in the site during 2007 to convertthe site to biodiesel production and provide working capital. D1 is currentlyreviewing a number of potential funding options for this planned investment. The Group strategy is for production from the site to deliver a contribution toboth Group revenues and earnings in 2007. The site also includes significantother assets not required for biodiesel production, and D1 is investigatingoptions for earning ancillary revenues through letting those elements of thesite and facilities not immediately required, for example storage space, tothird parties. The Bromborough site, which formerly produced fuel and lubricant additives, isadjacent to the River Mersey. It has blending and drumming plants and 24,000tonnes of storage capacity suitable for feedstock and processed biodiesel. Italso has 75,000 ft2 of warehousing and a waste water treatment facility.Lubrizol announced its plans to close the site in January 2005. It is intended that the first phase of operations at the new site will createapproximately 45 new jobs. The site is not currently operational and the transaction is a propertyacquisition, conditional, inter alia, upon landlord consent for the transfer ofthe leasehold titles within the site being obtained. As is customary for such transactions, D1 will provide an environmentalindemnity to Lubrizol in respect of potential historic environmentalliabilities, subject to certain exceptions. This indemnity is unlimited in timeand amount. The Directors are satisfied the indemnity is not unduly onerous inthe circumstances. Commenting on today's announcement, Elliott Mannis, Chief Executive Officer of D1 said: "The acquisition of the Bromborough site signals a major step change in thegroup's projected capacity to produce and market biodiesel in the UK. Refiningis a major part of D1's strategy alongside agronomy and trading, and thistransaction has the potential to make us the UK's largest biodiesel refinerwithin two years. We believe that introduction in the UK of a mandatory 5% biodiesel blend underthe Renewable Transport Fuels Obligation (RTFO), to be phased in progressivelyfrom 2008 to 2010, will create a market of a size that requires biodieselproduction facilities of the scale that we plan for Bromborough. We believe thatwe are now in a position to bring the profile of our business in the UK intoline with the position it enjoys in other overseas markets and furtherstrengthen our global brand. "Bromborough will enable the company to import, refine and distribute biodieselto the key UK urban markets of Liverpool, Manchester and Birmingham,complementing D1's base in the North East, and to ship biodiesel to west coastrefinery customers. The conversion of the site facilities to produce biodieseloffers a cost-effective means to increase production quickly to meet demand fromthe refining of imported feedstocks, and generate significant revenues, inadvance of the availability of D1's own jatropha in volume. Our modular refiningtechnology will enable us to expand capacity quickly at a competitive capitaland operating cost. We believe this transaction demonstrates that greenindustries such as biofuels have a real capacity to create employment." Contacts D1 Oils:Elliott Mannis, Chief Executive OfficerTel: +44 (0) 1642 755580 Graham Prince, Head of Corporate CommunicationsTel: +44 (0) 1642 755580Mobile: +44 (0) 7973 323840 Brunswick Group:Kevin Byram / Mark AntelmeTel: +44 (0) 20 7404 5959 Conference Call A conference call for analysts and investors will be held on Thursday 14September. There will be a brief synopsis of the announcement following whichthere will be an opportunity for participants to ask questions of D1 Oilsmanagement. The call will commence at 14:00hrs UK time. Participants can jointhe call by dialling the number below, providing their name and other details,and quoting the "D1 Oils Conference Call". Dial-in: +44 (0) 1452 541 077Pin: 6572179 A recording of the call will be available for one week and is accessible bydialling +44 (0) 1452 55 00 00. Photographs A satellite image of the Bromborough site is available on the D1 website,www.d1plc.com. Notes to Editors D1 Oils plc is a UK-based global producer of biodiesel. We are building a globalsupply chain and network that is sustainable and delivers value from'earth-to-engine'. Our operations cover agronomy, refining and trading. We arepioneering the science, planting and production of inedible vegetable oils; wedesign, build, own, operate and market biodiesel refineries; and we source,transport and trade seeds and seedlings, seedcake, crude vegetable oils andbiodiesel. Our vision is to be the world's leading biodiesel business. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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