D1 Oils Plc
14 September 2006
14 September 2006
D1 to Acquire Major Site for Biodiesel Production and Distribution on Merseyside
• Major site at Bromborough in North West England to be acquired for
conversion to biodiesel production, storage and distribution
• Expected initial capacity of 100,000 tonnes from conversion of the site
to biodiesel production in 2007 at an estimated capital cost that would be
lower than full construction
• Strategy to increase refinery capacity by a further 100,000 tonnes in
• Refining operations anticipated to commence in 2007 subject to obtaining
• Purchase consideration of £3m
• D1's total UK biodiesel production capacity anticipated to reach 420,000
tonnes by end 2008
In accordance with AIM Rule 12, D1 Oils plc (D1), the UK-based global producer
of biodiesel, today announces that it has exchanged contracts to acquire a 47
acre site at Bromborough on Merseyside for a second major biodiesel production,
storage and distribution centre. Once operational the new site is expected have
an initial production capacity of 100,000 tonnes from conversion of the
facilities to biodiesel production during 2007, with a further 100,000 tonnes of
planned refinery capacity to be added in 2008. The site offers distribution
access within a 70 mile radius to large UK urban markets in the North and
Midlands, as well as seaborne delivery to potential UK west coast refinery
customers and to Ireland. The Directors believe the acquisition should make D1 a
leading supplier of biodiesel to the growing UK market.
D1 currently has 32,000 tonnes of capacity at its Middlesbrough site and has
previously announced its intention to increase total UK installed capacity to
220,000 tonnes by the end of 2007. Combined with the planned production capacity
from its Middlesbrough plant, the acquisition of the site has the potential to
increase D1's installed biodiesel production capacity to 320,000 tonnes by the
end of 2007 and 420,000 tonnes by the end of 2008.
The acquisition of the site is in line with D1's stated strategy of building
capacity to refine imported edible oil feedstocks until its own supplies of
crude jatropha oil start to become available from 2008. The first 100,000 tonnes
of new production capacity is to be obtained by re-engineering site facilities
to refine vegetable oil into biodiesel. The additional 100,000 tonnes of
capacity is to be added using D1's proprietary, modular refinery technology. The
Directors believe that the site has sufficient area and facilities to expand
production significantly. The existing infrastructure will also support the
installation of pre-treatment facilities to allow processing of crude jatropha
vegetable oil in 2008 at a reduced capital cost.
The acquisition of the site from a subsidiary of The Lubrizol Corporation
(Lubrizol) will be for cash consideration of £3m. It is expected that the
purchase consideration will be funded from both existing cash resources and a
new mortgage facility, although the latter is not required for the acquisition
to proceed. Completion is expected by 31 December 2006.
D1's intended strategy is to invest up to £8m in the site during 2007 to convert
the site to biodiesel production and provide working capital. D1 is currently
reviewing a number of potential funding options for this planned investment.
The Group strategy is for production from the site to deliver a contribution to
both Group revenues and earnings in 2007. The site also includes significant
other assets not required for biodiesel production, and D1 is investigating
options for earning ancillary revenues through letting those elements of the
site and facilities not immediately required, for example storage space, to
The Bromborough site, which formerly produced fuel and lubricant additives, is
adjacent to the River Mersey. It has blending and drumming plants and 24,000
tonnes of storage capacity suitable for feedstock and processed biodiesel. It
also has 75,000 ft2 of warehousing and a waste water treatment facility.
Lubrizol announced its plans to close the site in January 2005.
It is intended that the first phase of operations at the new site will create
approximately 45 new jobs.
The site is not currently operational and the transaction is a property
acquisition, conditional, inter alia, upon landlord consent for the transfer of
the leasehold titles within the site being obtained.
As is customary for such transactions, D1 will provide an environmental
indemnity to Lubrizol in respect of potential historic environmental
liabilities, subject to certain exceptions. This indemnity is unlimited in time
and amount. The Directors are satisfied the indemnity is not unduly onerous in
Commenting on today's announcement, Elliott Mannis, Chief Executive Officer of
'The acquisition of the Bromborough site signals a major step change in the
group's projected capacity to produce and market biodiesel in the UK. Refining
is a major part of D1's strategy alongside agronomy and trading, and this
transaction has the potential to make us the UK's largest biodiesel refiner
within two years.
We believe that introduction in the UK of a mandatory 5% biodiesel blend under
the Renewable Transport Fuels Obligation (RTFO), to be phased in progressively
from 2008 to 2010, will create a market of a size that requires biodiesel
production facilities of the scale that we plan for Bromborough. We believe that
we are now in a position to bring the profile of our business in the UK into
line with the position it enjoys in other overseas markets and further
strengthen our global brand.
'Bromborough will enable the company to import, refine and distribute biodiesel
to the key UK urban markets of Liverpool, Manchester and Birmingham,
complementing D1's base in the North East, and to ship biodiesel to west coast
refinery customers. The conversion of the site facilities to produce biodiesel
offers a cost-effective means to increase production quickly to meet demand from
the refining of imported feedstocks, and generate significant revenues, in
advance of the availability of D1's own jatropha in volume. Our modular refining
technology will enable us to expand capacity quickly at a competitive capital
and operating cost. We believe this transaction demonstrates that green
industries such as biofuels have a real capacity to create employment.'
Elliott Mannis, Chief Executive Officer
Tel: +44 (0) 1642 755580
Graham Prince, Head of Corporate Communications
Tel: +44 (0) 1642 755580
Mobile: +44 (0) 7973 323840
Kevin Byram / Mark Antelme
Tel: +44 (0) 20 7404 5959
A conference call for analysts and investors will be held on Thursday 14
September. There will be a brief synopsis of the announcement following which
there will be an opportunity for participants to ask questions of D1 Oils
management. The call will commence at 14:00hrs UK time. Participants can join
the call by dialling the number below, providing their name and other details,
and quoting the 'D1 Oils Conference Call'.
Dial-in: +44 (0) 1452 541 077
A recording of the call will be available for one week and is accessible by
dialling +44 (0) 1452 55 00 00.
A satellite image of the Bromborough site is available on the D1 website,
Notes to Editors
D1 Oils plc is a UK-based global producer of biodiesel. We are building a global
supply chain and network that is sustainable and delivers value from
'earth-to-engine'. Our operations cover agronomy, refining and trading. We are
pioneering the science, planting and production of inedible vegetable oils; we
design, build, own, operate and market biodiesel refineries; and we source,
transport and trade seeds and seedlings, seedcake, crude vegetable oils and
biodiesel. Our vision is to be the world's leading biodiesel business.
This information is provided by RNS
The company news service from the London Stock Exchange