27 February 2017
DRAX GROUP PLC
(Symbol: DRX)
Process for Potential Acquisition of Distressed Pellet Plants
Today Drax announces that it is participating in separate processes(1) for the acquisition out of bankruptcy of the operating assets of Texas Pellets(2) and Louisiana Pellets(2).
Drax has submitted initial cash bids for these assets as part of an auction process, which will be held on 1 and 2 March 2017. Whilst these are binding bids, and could be accepted by the sellers, it is expected that the successful buyer will be determined through auctions.
Drax has previously indicated its intention to expand its self-supply compressed wood pellet operations to support 20-30% of its generation requirement. Subject to a disciplined approach to pricing in the auctions, the acquisition of these assets would help Drax meet this target.
Enquiries:
Drax Investor Relations: Mark Strafford
+44 (0) 1757 612 491
Media:
Drax External Communications: Paul Hodgson
+44 (0) 1757 612 026
Website: www.drax.com
Notes:
(1) Texas Pellets, Inc. and German Pellets Texas, LLC (collectively "Texas Pellets") and Louisiana Pellets, Inc. and German Pellets Louisiana, LLC (collectively "Louisiana Pellets") are currently going through "Chapter 11" bankruptcy processes in the United States and are seeking purchasers for substantially all of their assets.
(2) Texas Pellets is the owner and developer of a wood biomass pellet manufacturing facility located in Woodville, Texas and leases a five-silo pellet storage facility located at Port Arthur, Texas. As at 31 December 2016 the company gross assets of Texas Pellets were US$301.5m, which includes operating and non-operating assets.
For the year ending 31 December 2015, Texas Pellets reported a loss for the year of US$16.4m. Further information published by the administrator for the period May to December 2016 indicates a loss of US$15.3m.
Louisiana Pellets is the owner and developer of a wood biomass pellet manufacturing facility located in Urania, Louisiana. As at 31 December 2016 the company gross assets of Louisiana Pellets were US$504.7m, which includes operating and non-operating assets.
All numbers are as reported by Texas Pellets and Louisiana Pellets, based on unaudited accounts. The value of the operating assets will be determined by the auction processes on 1 and 2 March 2017.
END
