Pinnacle acquires 70% stake in Alabama pellet plant

On Oct. 15, Pinnacle Renewable Holdings Inc. announced it has closed the previously announced acquisition of a 70 percent interest in an Aliceville, Alabama-based pellet plant from the Westervelt Co.

Pinnacle first announced plans to complete the acquisition in early September. Westervelt will retain a 30 percent interest in the facility. 

The Aliceville pellet plant has an annual production capacity of 270,000 metric tons. Approximately 210,000 metric tons per year of that capacity is committed under a long-term off-take contract to a major European utility. The remaining production volume will be sold through Pinnacle’s contracted backlog of long-term take-or-pay off-take contracts.

Pinnacle hosted an investor call on Sept. 7 to discuss the transaction. During the call, Robert McCurdy, CEO of Pinnacle, noted that the acquisition was not the result of a competitive bid process. Rather, he said Westervelt was looking for a partner, asked key people, and received a recommendation to approach Pinnacle.

Regarding the transaction, McCurdy said Pinnacle views the plant as an entry point into the U.S. Southeast market and a great platform for growth, noting the region offers exciting opportunities for Pinnacle in the future. “This transaction is highly strategic for us,” he said during the call. “It serves as a platform for growth in this area.”

Information released by Pinnacle notes the company funded the acquisition of its 70 percent stake in the Aliceville facility through a draw on its credit facility and cash on hand. Pinnacle and Westervelt are currently undertaking a capital spending program to improve safety, product quality and plant efficiencies.