.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} For 18 months, a crew of attorneys from the BrownWinick law firm burned the midnight oil to help forge North America’s largest producer of biodiesel.

Ames-based Renewable Energy Group Inc. (REG) announced March 15 that it had completed asset purchase and consolidation agreements with manufacturers in Newton and Danville, Ill., that will allow it to produce 122 million gallons a year of biodiesel.

REG gained attention in 2008 when it announced that it had perfected a process for commercial-scale production of algae-based biodiesel, expanding beyond the use of soybean oil and other feedstocks to manufacture the biofuel.

Catherine Cownie, an attorney with BrownWinick, said the search for alternatives to soy oil was prompted by a run-up in the cost of soybean oil that led to financial woes in the biofuels industry.

Don Huyser was an initial investor in Newton-based Central Iowa Energy LLC, one of the companies acquired by REG.

Central Iowa Energy was hit hard by an increase in the price for soybean oil, to around 50 cents a pound from 17 cents a pound when the company opened in 2007, said Huyser, who will sit on REG’s board of directors as a result of the acquisition.

Huyser said the company’s shareholders realized that in order to compete it had to grow beyond its 30 million gallon a year capacity, and it needed financial support to survive.

“Thirty million gallons is not small in a small world but it is in the big world,” he said. “The thought was we wouldn’t stay independent forever.”

At the time of the acquisition, Central Iowa Energy had been in default for about one year on loans from a consortium of lenders, he said.

Efforts to find investors were frustrated by tight credit markets and demands for high returns by potential equity partners.

“We looked at banks and private equity,” Huyser said. “If you could find (money) the cost was unbelievably high. It just floored me. Then all of the credit crisis came on and then it just got completely unavailable. Starting out, investors wanted returns in the 25 percent level for private equity, and if it wasn’t paid, they owned the whole store really quick. It just got worse as things went on.”

Central Iowa Energy would have faded from the market early on if it had not acquired equipment to process animal fat as well as soybean oil, Huyser said.

REG had a working relationship with Huyser’s company, from the start, operating the plant and giving notice that if the owners ever wanted to sell, the Ames company was interested in buying.

However, Central Iowa Energy attempted to go it alone before turning to REG, Huyser said.

“It was a long, drawn-out process,” he said.

Cownie said the purchase was overseen by the U.S. Securities and Exchange Commission (SEC). In all, five law firms, including Des Moines-based Nyemaster, Goode, West, Hansell & O’Brien P.C., handled various aspects of the transaction.

BrownWinick represented Central Iowa Energy, negotiating terms of the consolidation transaction, reviewing and preparing the asset purchase agreement and other transaction documents and reviewing and preparing the prospectus and proxy statement that had to be filed with the SEC.

Several businesses in addition to Central Iowa Energy and the Danville company considered merging with REC. Each had to file a prospectus and proxy statement with the SEC that explained the terms of the consolidation to the respective owners of each participating company.

The prospectus and proxy statement was declared effective by the SEC in January. The following month, Central Iowa Energy held a shareholders’ vote.

In addition to following regulatory guidelines, the acquisition also was drawn out because of a delay in adoption of a federal renewable fuels standard and reauthorization of the federal blenders tax credit.

As a result of the deal, REG owns the Newton plant, now called REG Newton, a plant in Ralston, Iowa, and plants in Illinois and Texas. In addition, it has partnerships with five other biodiesel manufacturers.

REG’s chairman and CEO, Jeff Stroburg, said in a news release that demand by major petroleum distributors and oil refiners played a key role in the decision to move forward with plant consolidation. “With the Renewable Fuels Standard now in effect, the distillate market is demanding technical expertise, dependable supply, more efficient distribution and creative pricing options from major biodiesel partners,” he said.

Cownie noted that challenges remain for the biodiesel industry, especially in obtaining credit or reworking financing deals and in finding new sources of feedstocks and purchasing the expensive equipment to process them.

As for himself, Huyser is not certain that he would venture into the biofuels industry again, at least not as an independent.

“The frenzy to get plants built, whether it was ethanol or biodiesel plants, in that 2005 range, it was just crazy,” Huyser said. “Everybody and their dog wanted to build one and be invested in one. That has cooled immensely.”