CHARLOTTE, N.C. -- NewGen Technologies Inc. said that it is continuing to work towards completing its previously announced acquisition of Appalachian Oil Co. Although the closing of the APPCO acquisition has been delayed primarily due to a change in financing partners, I am very confident that the transaction will be closed during the next few weeks after we secure acquisition financing, said S. Bruce Wunner, chairman of NewGen.
The company recently paid a $250,000 nonrefundable, initial good-faith deposit to the current shareholders of APPCO in order [image-nocss] to extend the deadline for closing the acquisition until April 2, 2007. The deposit will be applied against the purchase price at closing. In addition, NewGen has the option to pay an additional $250,000 deposit to extend the closing deadline until April 16, 2007.
The companydeclined to offer details to CSP Daily News on the financing changes. In mid-January, NewGen had announced an agreement with BioFuel Investments LLC relating to $70 million in secured debt financing to be used to complete the APPCO purchase and pay off existing debt. BFI's proposed financing facility was for a 10-year term with an interest rate of 10%, interest-only for the first two years. In addition, BFI would receive a warrant to purchase five million shares of NewGen's common stock at a price of $2 per share. BFI is part of a private investment group focused on environmentally friendly, renewable biofuel and alternative energy projects. The BFI financing was contingent upon customary business due diligence and completion of commercial definitive agreements.
The acquisition of APPCO will position NewGen as a vertically integrated renewable fuel company in the southeastern United States. Shortly after completion of the APPCO acquisition, ReFuel America, a wholly owned subsidiary of NewGen, will begin operations at three fuel terminals it owns in North Carolina, South Carolina and Georgia.
NewGen also announced that Noel Corcoran had resigned as chairman of NewGen Technologies and that S. Bruce Wunner, NewGen's previous chairman and a former senior executive with McDonalds Corp., will serve as interim chairman.
I am appreciative of the commitment that the management teams at NewGen and APPCO have put forth to complete this transaction and am looking forward to pursuing additional strategic business opportunities, said S Wunner.
Appalachian Oil Co., founded in 1923, operates from its offices in Tennessee and Virginia, selling to wholesale and retail customers in Tennessee, Kentucky, Virginia, West Virginia, North Carolina and South Carolina. APPCO's branded products include Exxon, BP, Marathon, Sunoco, CITGO and their own APPCO brand. It operates 58 company-owned gas station convenience stores and supplies petroleum products to more than 160 other independent dealers and distributors.
APPCO had revenues of over $400 million, distribution of more than 225 million gallons of fuel products with more than 500 employees, in the 12-month period ended Sept. 30, 2006.
APPCO buys fuel products directly from secure petroleum product pipelines supplied by refineries of the major oil companies and independent refiners. It buys fuel ethanol in bulk from regional manufacturers and blends it with its hydrocarbon petroleum products. And Blountville, Tenn.-based APPCO operates truck and trailer and other delivery equipment also capable of mobile refueling for various public and private-fleet customers.
Charlotte, N.C.-based NewGen said its mission is to be a global vertically integrated (fields-to-wheels) manufacturer and distributor of premium biofuels and hydrocarbon blends intended to reduce the environmental and economic impact of world petroleum use. NewGen is developing and will take to market clean-burning fuels by using its own proprietary products and other technology, it said.
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