Centennial, CO., June 28, 2006 - Penford Corporation, a global leader in ingredient systems for food and industrial applications, today announced plans to invest $42 million for approximately 40 million gallons of ethanol production capacity at its Cedar Rapids, Iowa facility. The Company expects the facility to be producing ethanol by the end of 2007.
“Penford’s entry into ethanol will create value for our shareholders from more complete utilization of existing facilities and resources”, said Tom Malkoski, Penford Corporation President and Chief Executive Officer. “We will be able to process more corn by utilizing existing assets more intensively and plan to convert a portion of our current production to ethanol use. This initiative also provides an attractive entry into this growing market through a lower capital investment and shorter time to market compared with many ethanol projects.”
Penford has much of the infrastructure contained within the Cedar Rapids plant to participate in the ethanol market with sufficient grain handling, separation processes, utilities, and logistics capabilities. The factory is centrally located near important rail and ground transport arteries. The ethanol facility will occupy available space within the existing site footprint. The construction will not interfere with scheduled production for current customers.
“Ethanol production represents an important step in broadening the utilization of our bio-processing assets,” Malkoski added. “We believe the fermentation process of ethanol production will also provide a platform for future high value products derived from renewable resources.”
The initial stages of the ethanol investment will be funded through the existing bank facility. The Company’s banks have approved amending the current credit agreement to permit additional capital expenditures related to this project. Penford will be reviewing and evaluating all appropriate structures and funding options for the optimal long-term financing of the investment in ethanol capacity.