Vega Biofuels Signs Exclusive Agreement for the Production of Bio-CoalAgreement Increases Profit Margin and Reduces Capital Requirements
MARKET WIRE 7:30 AM ET 2/19/2015
NORCROSS, GA -- (Marketwired) -- 02/19/15 -- VEGA BIOFUELS, INC. announced today that it has entered into an Exclusive Manufacturing Agreement to have its Bio-Coal produced.
Vega Biofuels has entered into an Agreement with Colorado based, Vencor International, Inc. to manufacture the Company's Bio-Coal energy product on an exclusive basis. The two companies have been working together recently to meet the requirements of Vega's international clients. Recent testing of Vencor's torrefied wood product exceeded these requirements and Vencor is now manufacturing torrefied Bio-Coal for Vega.
Manufactured from timber waste using torrefaction technology, Bio-Coal has a high energy density of up to 13,000 BTUs/Lb and is considered a renewable energy fuel that meets the Renewable Portfolio Standards and Renewable Energy Credits (RECs) in the United States.
Vega and Agri-Tech Producers, LLC entered into a Joint Venture Agreement to build and operate a manufacturing plant in Allendale, SC to produce the Company's Bio-Coal. The Agreement required Vega to make a capital investment in the Joint Venture in the amount of two million dollars. Vega would have owned forty percent of the Allendale facility.
The ten year Agreement announced today moves the Company in a different direction and allows Vega to immediately begin filling the orders it has in hand to produce revenue. Vencor has recently increased its manufacturing capacity and can now meet the production demand from Vega.
"We have mixed emotions today," stated Michael K. Molen, Chairman/CEO of Vega Biofuels, Inc. "We are extremely excited to expand our relationship with Vencor. This decision was an easy one for us. The Allendale JV required us to commit two million dollars to the venture for 40% of the profit. The deal with Vencor will provide more bottom line profit than we would have received from the JV without laying out two million dollars. We can now use a fraction of that capital to build the Company in a way that will maximize our ability to secure orders around the world instead of dealing with the day to day manufacturing of the product. We have notified ATP of our intentions and for the foreseeable future, all Bio-Coal will be sold by Vega and produced by Vencor International. All product produced by Vencor will be shipped directly to our clients under the private label of Vega Biofuels. We did everything we could to raise the necessary capital for the Allendale JV, but fell short of our goal. The deal with Vencor allows us to start filling the orders that we have in hand and generating revenue much sooner. We have a large, long-term Agreement to ship Bio-Coal to a European client and look forward to getting started with production. The deal with Vencor will have a tremendous impact on our bottom line profits without such a large capital outlay. I will be at Vencor's manufacturing facility next week and will take some pictures of the production of Bio-Coal and post on our website. I want to thank our shareholders for their patience while we worked through these issues. Things should move much faster for the Company now."
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