BLOUNTVILLE, Tenn. -- It won't be via the method it first sought, but NewGen Technologies Inc. still will be the exclusive supplier of biofuels to more than 200 stores owned or supplied by Appalachian Oil Co. (Appco).
A month after NewGen lost its outright bid to purchase Blountville, Tenn.-based Appco, it has reached an agreement with the new purchaserRichardson, Texas-based Titan Global Holdingsfor the rights to exclusively manufacture and distribute biofuels for Appalachian's 56 Appco stores and more than 160 dealer locations.
NewGen is now strategically positioned to be the leader in biofuel supply and distribution from terminals to retail under one umbrella in the southeastern United States, said NewGen CEO Bruce Wunner in a press release.
Attempts by to contact Wunner for comment were unsuccessful at presstime; however, documents filed with the Securities & Exchange Commission (SEC) show NewGen's effort to buy Appcoa deal first announced by CSP Daily News in Januaryfell through when it failed to meet the deadline set by the acquisition documents. NewGen has since filed a lawsuit against financial lender and former board chairman Noel Corcoran and a consultant used in the deal seeking compensatory and punitive damages.
In the SEC document, NewGen said Corcoran's claims that the company had defaulted on a loan forced NewGen into unfavorable financing terms, among other claims, thus forcing the Appco deal to fall through.
In the meantime, Titan Global Holdings Inc., a high-growth diversified holding company, has laid claim to Appco as the first acquisition by its newly formed Titan Energy Group, a division engaged in the acquisition and management of complementary energy sector assets.
It is the opinion of Titan's board of directors that the formation of Titan Energy Group and the acquisition of Appco are the most important events in our company's history, David Marks, chairman of Titan Global Holdings, said in a press release issued July 24 announcing the deal. Titan's initiatives in the energy sector are consistent with Titan's unwavering commitment to the creation of shareholder value. Our expectation is that Titan will continue to grow as a high-growth diversified holding company and extend its reach even beyond energy.
The company is acquiring Appco principally with debt financing provided by Greystone Business Credit. The terms of the agreement to acquire Appco were not disclosed. The company anticipates closing the transaction in September 2007.
The vision of Titan's management coupled with the company's financial strength bode well for Appco's future growth, said Jeff Benedict, CEO of Appco. Titan has a track record of not only preserving but also creating jobs following its acquisitions, and we are confident they will continue our legacy.
A day after the purchase was announced, NewGen revealed its strategic agreement with Titan for the rights to exclusively manufacture and distribute biofuels for Appco. Under the terms of the agreement, Titan agreed to enter into a 10-year supply agreement with Refuel America Inc., a wholly owned subsidiary of NewGen, providing it with the exclusive right to supply biofuel products to Appco or its affiliates at the then prevailing market price for such biofuel products at the time an order was placed.
The agreement will provide us with the exclusive right to supply biofuels to Appco, which was a synergy we coveted when we initially bid for Appco, Wunner said.
NewGen will aggressively focus on the ReFuel America fuel terminal revitalization, expansion and upgrade to also facilitate blended biofuels, ethanol and biodiesel, as well as premium hydrocarbons in the Charlotte, N.C., Spartanburg, S.C., and Columbus, Ga., markets, as well as expanding markets in the Southeast, according to the press release.
Other key details of the agreement reached with Titan include:
In exchange for NewGen's cooperation with Titan's efforts to purchase Appco and other consideration, Titan will pay NewGen $1.3 million in reimbursements for good faith deposits previously paid by NewGen to Appco and other Appco-related professional fees and expenses incurred by NewGen. Payments will be made at or prior to the Appco closing, which is anticipated to be Sept. 4, 2007.NewGen will receive $600,000 annually under a consulting agreement to provide advice on strategic and operational business matters related to biofuels and related strategic areas.Charlotte, N.C.-based NewGen's mission is to be a leading global, fully integrated manufacturer and distributor of premium biofuels and hydrocarbon blends that are intended to reduce the environmental and economic impact of world petroleum use. NewGen said it believes that it has developed the cleanest burning and highest performing fuels in the world by using its own technology that allows for more complete combustion.
Appco, formed in 1923, is a privately held petroleum company that owns and operates a petroleum-product distribution network that generated approximately $400 million in revenues for fiscal 2006. It distributes petroleum products to more than 160 dealers in the southeastern United States and owns and operates 56 convenience store locations.
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