Mission New Energy signs $4bn supply deal for biodiesel to US
Biodiesel refiner Mission NewEnergy has signed a $US3.5 billion ($3.82bn) five-year offtake agreement with US energy group Valero, leading its shares to jump sharply.
Mission announced yesterday that it had signed a binding five-year deal to provide a subsidiary of Valero with up to 200,000 tonnes of biodiesel annually, which Valero could double if it chose to.
The agreement also allows Valero’s subsidiary, Valero Marketing & Supply Co, the right to buy 25 per cent of Mission at 45c per share.
The figure is a 61 per cent premium to the current 30-day volume weighted average price, Mission said in a statement.
Shares in Mission rocketed up following the news and closed up 7.5c, or 21.13 per cent, at 43c on the day’s trading.
“We are delighted to be supplying Valero and look forward to expanding our commercial relationship,” said Mission managing director Nathan Mahalingam.
“The increasing demand for biodiesel — driven by the Renewable Fuels Standard and coupled with this long-term supply agreement — solidifies the United States as a key market for Mission going forward,” Mr Mahaligam said.
The Renewable Fuels Standard is a US policy that mandates renewable fuel levels.
Under the terms of the equity deal, Mission will issue Valero two tranches of warrants to purchase common stock, subject to shareholder approval.
The Australian company said the first shipment under the supply agreement was expected to occur in the second quarter of next year.
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