TEMPE, Ariz., April 14, 2008 (PRIME NEWSWIRE) -- Renegy
Holdings, Inc. (Renegy) (Nasdaq:RNGY), a renewable energy
company focused on acquiring, developing and operating a
growing portfolio of biomass to electricity power generation
facilities, announced today that it has signed a non-binding
Letter of Intent (``LOI'') for the acquisition of a 20 megawatt
(``MW'') biomass power plant from Sierra Pacific Industries
(``SPI'') for $13.0 million. The plant operates in Loyalton,
California and currently sells 10 MW of its electrical power
output to Sierra Pacific Power (``SPP''), a leading electric
utility company serving northern Nevada and northeastern
California.
``The Loyalton plant will provide us with an additional source
of revenue and anticipated positive cash flow from the plant
during the second half of 2008,'' stated Bob Worsley, chairman
and CEO of Renegy. ``Acquiring this plant, together with
the Ione plant that we announced last week, will increase
the electrical power output capacity of our portfolio of
biomass power generating assets to 75 MW, and advance us
toward our goal of building the operating critical mass
necessary for Renegy to become a self-sustaining business
beginning in 2009. We previously purchased a biomass facility
located in Susanville, California from SPI, and are pleased
that our growing relationship has yielded another economically-compelling
growth opportunity for us that also supports SPI's interest
in divesting its non-core business assets. Our agreement
with SPI will also provide for a supply of wood waste from
SPI's sawmill and other timber-related operations to supplement
the fuel requirements of both the Loyalton and Susanville
plants. Furthermore, the Northern California fuel zone that
we plan to implement to manage the fuel requirements of
our Susanville and Ione plants will also support the Loyalton
facility. Having a single, centralized fuel aggregation
infrastructure that can supply multiple biomass facilities
will allow us to realize significant cost efficiencies across
our California plant operations.''
Under the terms of the LOI, the sale will also include approximately
50 acres of land at the Loyalton plant site along with existing
fuel contracts and all operating and environmental permits
for the plant. Renegy expects the transaction to close by
June 30, 2008, subject to its completion of final due diligence,
entering into a definitive purchase agreement for the plant,
and other closing conditions. Renegy will provide partial
payments toward the purchase price upon execution of a definitive
purchase agreement and upon the closing of the transaction.
Payment of the substantial majority of the purchase price
will not be due until December 31, 2008.
Fuel for the Loyalton plant is comprised primarily of wood
waste provided through long-term contracts with local suppliers.
Fifty percent of the fuel is currently derived from sawmills
and other forest residue from the surrounding area, and
the other fifty percent is derived from municipal wood waste
accumulating in nearby landfills. To further supplement
its fuel supply, Renegy's fuel aggregation team is currently
in negotiations with a large waste management company in
the area, and plans to actively explore opportunities to
procure forest-derived fuel from U.S. Forest Service lands.
Renegy is also currently in discussions with SPP to renegotiate
the terms of the existing power purchase agreement for the
Loyalton plant. Upon the closing of the acquisition, Renegy
intends to hire the current staff at the plant, consisting
of approximately 18 operating personnel and a seasoned plant
manager with more than 14 years of biomass fuel procurement,
plant operations and permitting expertise.
About Renegy
Renegy, based in Tempe, Arizona, is a renewable energy company
focused on acquiring, developing and operating a growing
portfolio of biomass power generation facilities. Renegy
seeks to rapidly grow its renewable energy assets with the
goal of becoming the leading independent power producer
(IPP) of biomass electricity in North America utilizing
wood waste as a primary fuel source. Renegy's current biomass
power generating assets include a 24 megawatt (MW) facility
near Snowflake, Arizona that is scheduled to begin commercial
operations this quarter, and an idle 13 MW biomass plant
in Susanville, California that has the potential to be restarted
by the end of 2008. Renegy's other business activities include
an established fuel aggregation and wood products division,
which collects and transports forest thinnings and woody
waste biomass fuel to its power plants, and which sells
logs, lumber, shaved wood products and other high value
wood by-products to reduce the cost of fuel for its primary
business operations. Find Renegy on the Worldwide Web at
http://www.renegy.com.
The Renegy Holdings, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4856
This news release contains forward-looking statements within
the meaning of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, and is
subject to the safe harbors created therein. These statements
include, but are not limited to, those regarding the prospects
and timing associated with execution of a definitive purchase
agreement and closing the acquisition of the 20 MW Loyalton
plant; the Company's projections regarding the prospects
for the plant to generate additional revenues and positive
cash flow during the second half of 2008; Renegy's ability
to successfully renegotiate the terms of the existing power
purchase agreement with SPP; Renegy's ability to procure
additional wood waste to supplement the fuel supply for
the plant; Renegy's ability to implement a single, centralized
fuel management infrastructure that can supply all its California
biomass plants and that can enable Renegy to realize significant
cost efficiencies across its California plant operations;
and Renegy's hiring of current staff at the Loyalton plant.
These statements are subject to risks and uncertainties
that could cause actual results and events to differ materially
from those expressed in the forward-looking statements.
These risks and uncertainties include, among others, the
risk that we will not close the proposed acquisition of
the Loyalton biomass plant; that we will not be able to
secure the financing necessary to fund the entire purchase
price of the plant or that such financing will be on unfavorable
terms; diversion of management's attention away from other
business concerns; the assumption of any undisclosed or
other liabilities in connection with the Loyalton plant;
the risk of unforeseen challenges relating to assignment
of the operating and environmental permits for the plant;
the risks associated with the development, generally, of
Renegy's overall strategic objectives; the existence of
unanticipated technical, commercial or other setbacks related
to Renegy's biomass plant operations; the ability of Renegy
to secure adequate fuel for its biomass plants; changes
in the environmental requirements relating to certain emissions;
and the other risks set forth in Renegy's Form 10-KSB filing
with the Securities and Exchange Commission. Renegy undertakes
no obligation to update any forward-looking statements to
reflect new information, events, or circumstances occurring
after the date of this release.