In a first-of-its-kind undertaking, ethanol maker Green Plains Inc. (NASDAQ: GPRE) said Monday morning that it has filed a confidential draft registration statement for an initial public offering (IPO) of its downstream ethanol transportation and storage assets. The company said the Form S-1 filing proposes an underwritten IPO to raise $200 million to $250 million by selling an unspecified number of limited partner interests in a new master limited partnership (MLP).
Green Plains said that the initial assets of the MLP will consist of the company’s downstream ethanol transportation and storage assets in 12 states through the Midwest and Southeast.
In its Form 10-K annual report filed last month Green Plains said:
In our marketing and distribution segment, our strategy is to build or acquire additional fuel terminals, expand our marketing efforts by entering into new or renewed contracts with other ethanol producers and realize additional profit margins by optimizing our commodity logistics. … We currently participate in ethanol logistic, transload services and continually seek opportunities to expand the capacity of these facilities through organic growth. We intend to seek acquisition of fuel terminal facilities that involve conventional, as well as renewable, fuels. We believe the expansion of our capacity will encourage the distribution of blended fuel and enable us to continue to capitalize on our vertically-integrated platform.
Green Plains owns eight fuel terminals with a throughput capacity of 822 million gallons per year. Most of the company’s ethanol plants are located near major highways or rail lines to move ethanol by rail or truck to bulk terminals.
The company does not operate any ethanol pipelines, instead leasing a fleet of about 2,200 tank cars to transport ethanol. Green Plains also leases approximately 900 hopper cars to transport distiller’s grain, a byproduct of ethanol production used for livestock feed. The company also uses some of its railcar fleet to transport crude oil for third parties.
Green Plains noted that the date of the IPO, the number of common units to be offered and the price range have not been determined and depend on a number of factors, including market conditions.
The company’s stock was up more than 10% Monday morning at $28.25, in a 52-week range of $20.31 to $46.28.