Pinnacle Renewable Holdings Inc. has entered into a definitive agreement to acquire a 70% interest in an operating industrial wood pellet production facility located in Aliceville, Alabama from The Westervelt Company . Westervelt will retain a 30% interest in the Aliceville facility, as the company says in the press release received by Lesprom Network.
The Aliceville facility has an annual production capacity of approximately 270,000 metric tons of industrial wood pellets. Approximately 210,000 metric tons per annum is committed under a long-term off-take contract to a major European utility. The remaining production volume from the Aliceville Facility will be sold through Pinnacle's contracted backlog of long-term, take-or-pay off-take contracts.
Westervelt is currently ramping up production at the Aliceville Facility. Pinnacle is partnering with Westervelt to optimize asset configuration, distribution logistics and fibre supply.
As part of the transaction, and consistent with Pinnacle's operating strategy, the Aliceville facility has now entered into long-term wood fibre supply contracts for residuals with several large local sawmills. Westervelt's sawmill, located in Moundville, AL, will remain an anchor supplier, ensuring strong alignment between Pinnacle and Westervelt.
Pinnacle expects to fund the purchase of its 70% stake in the Aliceville facility through a draw on its credit facility and cash on hand. The purchase will provide accretive free cash flow per share on an annualized basis. The transaction, which is subject to customary closing conditions, is expected to close in early October 2018.
Pinnacle is a rapidly growing industrial wood pellet manufacturer and distributor and the third largest producer in the world.