Renegy Signs Lease for Site of Susanville Biomass Facility
14 February 2008 - 4:20AM
Marketwired
TEMPE, AZ (NASDAQ: RNGY) announced today that it has entered
into a Lease and Option Agreement with Sierra Pacific Industries to
lease, with the option of purchasing, approximately 40 acres of
land in Susanville, California where a 13 megawatt biomass power
plant acquired by the Company in November 2007 is currently
located. Renegy intends to use this property for the operation of
the presently idle biomass facility, and estimates the plant could
be fully operational by the end of 2008, subject to securing
necessary financing to refurbish the plant, obtaining any required
construction, operation and environmental permits, identifying and
securing necessary fuel sources at a cost-effective rate, entering
into a power purchase agreement for the entire power output of the
plant, and other activities necessary to restart and operate the
plant.
"Preliminary results of our studies indicate that a sufficient
supply of wood waste fuel may exist in the Susanville area, and as
such, we intend to restart the plant in its current location,"
stated Bob Worsley, chairman and CEO of Renegy. "We are currently
in discussions with a local forest products and timber company for
the supply of wood waste. We are also in discussions with
government agencies, local green waste sites and other parties
relating to long-term forest thinning and other contracts that may
enable us to secure additional fuel. By avoiding the costs
associated with relocating and reassembling the plant, we
anticipate that our investment in the refurbishment and
re-commissioning of the plant will be substantially less than the
$15.0 million previously projected. Including acquisition costs, we
now estimate the total cost of refurbishing and commissioning this
plant at less than $800 per kilowatt, whereas the cost to build a
new plant can range from $2,500 to $3,000 per kilowatt. Based on
the attractive economics of this investment, exploring
opportunities to acquire other idled biomass facilities will
continue to be an important component of our growth strategy."
Renegy is continuing discussions with utility companies who have
expressed an interest in securing the electrical output of the
plant through a long-term power purchase agreement. The Company is
also pursuing various financing opportunities it has identified to
help fund the project.
The terms of the Lease Agreement provide for monthly lease
payments of $750 per acre per month commencing January 31, 2008.
Simultaneously with entering into the Lease, for consideration of
$100,000, Renegy entered into an Option Agreement, which provides
Renegy the option to acquire the 40-acre site for a purchase price
of $80,000 per acre, subject to a price escalation of 1.5% per
annum. The Option Agreement terminates on January 31, 2013, subject
to certain exceptions. The Option Agreement provides that the
initial $100,000 payment shall be credited against the purchase
price of the property upon exercise of the Option. In addition, the
Lease Agreement provides that 100% of the first 24 months of lease
payments made by Renegy shall apply to the purchase price under the
Option Agreement if Renegy elects to exercise its purchase option.
More information on the Lease and Option Agreement can be found in
a Form 8-K that will be filed by the Company today with the
Securities and Exchange Commission.
About Renegy
Renegy, based in Tempe, Arizona, is a green energy company
focused on acquiring, developing and operating a growing portfolio
of biomass to electricity 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. Its first project is Snowflake White
Mountain Power (Snowflake), a 24 megawatt (MW) biomass facility
under construction near Snowflake, Arizona. This facility is
scheduled to begin supplying electrical power to Arizona's two
leading utility companies in the second quarter of 2008, and serves
as a solid foundation for the Company's growth. Find Renegy on the
Worldwide Web at www.Renegy.com.
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 potential future purchase of the
40-acre site; the prospects and timing associated with commencing
operation of the Susanville plant, including obtaining necessary
financing to refurbish the plant, obtaining any required
construction, operation and environmental permits, identifying and
securing necessary fuel sources at a cost-effective rate, entering
into a power purchase agreement for the entire power output of the
plant, and other activities necessary to restart and operate the
plant; the expected investment of substantially less than $15.0
million and less than $800 per kilowatt to refurbish and restart
the plant; long-term fuel availability in the form of wood waste;
and the Company's growth strategy and future opportunities. 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 be able to secure
the necessary financing, permits, power purchase agreement or
long-term fuel supply for the Susanville plant; delays or cost
overruns associated with the completion of refurbishment and
commissioning of the plant; diversion of management's attention
away from other business concerns; the risks associated with the
development, generally, of the combined company's overall strategic
objectives; the existence of unanticipated technical, commercial or
other setbacks related to the Company's power facilities, including
construction delays and the ability of the Company to secure an
adequate, low-cost supply of fuel for its biomass plants; changes
in the environmental requirements relating to certain emissions;
and the other risks set forth in the Company's most recent Form
10-QSB filed with the Securities and Exchange Commission. The
Company undertakes no obligation to update any forward-looking
statements to reflect new information, events, or circumstances
occurring after the date of this release.
CONTACT: Megan Meloni Investor Relations (650) 631-2847
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