Australian Renewable Fuels Acquisition of Largest Competitor

28 January 2011
Melbourne, Australia

Australian Renewable Fuels Limited (ASX:ARW) has announced its intention to expand its national footprint with the acquisition of Biodiesel company, Biodiesel Producers Limited (BPL).

BPL has a state-of-the-art plant that uses world leading technology, converting tallow and waste cooking oil into quality Biodiesel that is significantly lower in toxic and greenhouse gas emissions than normal diesel.

This is a major coup for ARW and its strategic plans to be the leading Biodiesel producer and supplier in Australia.

“This acquisition will provide ARW with a national footprint with operations to service the Eastern Seaboard, South Australia and West Australia.” said Australian Renewable Fuels Chief Executive Officer, Tom Engelsman.

“Strategically, the BPL acquisition catapults ARW into being the most significant player in the Biodiesel space, positioning the company with improved overall supply options ,enhancing our ability to supply the major operating companies in Australia with a superior certified product that is consistent in both supply and quality.”

The BPL facility based in Barnawartha, Victoria, has a capacity of 60 million litres per annum increasing the capacity of ARW to 150 million litres per annum, making the company the only national biodiesel producer in Australia, which in addition is ASX listed.

The ability to leverage feedstock logistics and further optimise the use of specific low cost alternate feedstock for all plants will give ARW more scope to leverage market opportunities, particularly in the area of industrial, mining and transport supply. The BPL plant is unique in its ability to handle high Free Fatty Acid (FFA) feedstock, ensuring more competitive and economically viable cost structures going forward.

The predominantly non-cash assumption of BPL’s existing convertible note debt (with a redemption value of $21 million) will incorporate a payment and structure of AFR notes aligned to the future performance of BPL’s plant over a 5-year period.

Due diligence process has commenced and is expected to be finalised by the end of February 2011.

The strategic benefit for both companies will allow for the combined entity to fully explore the opportunities in the market place, not only with regard to the expanded use of Biodiesel, but also in related areas of interest and synergy.