Pure Biofuels to acquire Peru's largest biodiesel producer

Pure Biofuels today announced the execution of a binding letter of intent to acquire Interpacific Oil SAC’s biodiesel production business, Peru’s largest and longest running biodiesel processor.

Interpacific currently produces 7.2 million gallons (27.25 million liters) per year of biodiesel and has been producing commercial quantities since 2002 when the company became the first commercial level producer of biodiesel in Peru. The move positions Pure Biofuels to become the largest producer of biodiesel in Peru, and will further complement the company’s position when it completes construction on its primary biodiesel facility in Callao, Peru, expected in the fourth quarter of 2007 (earlier post).

The purchase price for Interpacific is US$6.3 million, payable US$0.7 million in cash and US$5.6 million in Pure Biofuels common stock, and a warrant to purchase 2,925,000 shares of Pure Biofuels common stock. The closing of the acquisition is subject to customary conditions including the negotiation and execution of definitive agreements and, if the acquisition is structured as a merger, the registration of the merger process in Peru.

According to a large continent-wide study by the Inter-American Development Bank, Peru is one of Latin America's countries with a clear biofuel export potential (earlier post):
bioenergy :: biomass :: biofuels :: energy :: sustainability :: palm oil :: biodiesel :: Peru ::

“We are very excited to announce the acquisition of Interpacific Oil’s biodiesel business in a transaction that means so much to our company,” stated Pure Biofuels CEO, Luis Goyzueta. “This is the company that I know well – it’s where I come from. Running Interpacific’s biodiesel facility for the last five years prepared me for the launch of Pure Biofuels. Now, bringing these two operations under our umbrella and operating at its current stage of profitability is a great privilege. It strengthens Pure’s position in the marketplace – and ultimately, it provides an earlier opportunity to fill the demand from our customers.”

Pure Biofuels plans to expand the facility to a capacity of 10 million gallons per year, over two to three months following the closing. Production of biodiesel will then continue while construction takes place on Pure’s main facility on land adjacent to the Port of Callao. A decision will be made at a later date on whether to relocate the Interpacific equipment onto the Callao Port property once construction is completed or to simply continue to operate it at its present location. Along with the acquisition of Interpacific Oil, the operations and management personnel for the biodiesel facility will also be transferred with the transaction, further ensuring that there will be no interruption in operations and/or distribution.

Pure Biofuels aims to become a leader in Latin America's rapidly emerging biofuels industry. Pure Biofuels' flagship project, the Callao Port biodiesel refinery near Lima, Peru, is scheduled to commence production during the fourth quarter of 2007. The Callao Port refinery will process biodiesel from crude palm oil feedstock. Pure Biofuels has secured memorandums of understanding with local fuel distributors for all of Callao Port's annual biodiesel production.