Drax increases ownership share of 2 US pellet plants

By Drax | July 01, 2021

Drax is pleased to announce that it has agreed to acquire a 20 percent minority interest in Alabama Pellets LLC—the joint venture which owns the Demopolis and Aliceville pellet plants—from The Westervelt Company for $29.7 million cash consideration. The acquisition will increase the Group's interest in Alabama Pellets to 90 percent and provide Drax with economic control over a further c.130,000 metric tons of biomass production capacity per annum. Completion is expected to take place in July 2021.

Westervelt is considered to be a related party under the U.K. Listing Rules with the proposed transaction constituting a Smaller Related Party Transaction under Listing Rule 11.1.10.

The acquisition of Pinnacle Renewable Energy Inc. included a change of control provision over Alabama Pellets. Drax has been in discussions with Alabama Pellets joint venture partners regarding future working relationships, including their minority interests. The remaining joint venture partner, Two Rivers Lumber Co., LLC, holds a 10 percent economic interest.

Demopolis and Aliceville are located in Alabama, in the U.S. southeast, close to the Group's existing U.S. operations and have a combined nameplate production capacity of 660,000 metric tons per annum. Aliceville was commissioned in 2018 and Demopolis is expected to be commissioned in 2021.

Drax Group has 13 operational pellet plants (including Aliceville) plus satellite plant developments and Demopolis, with total nameplate production capacity of 4.9 million metric tons per annum once commissioned. These plants are geographically diverse and sited in three major fiber baskets (British Columbia, Alberta and the US southeast) with access to four deep water ports providing routes to markets in Asia, Europe and the U.K.