REX American Resources Corporation has agreed acquire 48% equity ownership interest in NuGen Energy of South Dakota. REX has agreed to acquire its ownership interest for $9.2 million with a commitment of up to an additional $6.5 million based upon the future profitability of NuGen.
NuGen Energy, a subsidiary of Central Farmers Cooperative, operates a nameplate 100 million gallon ethanol plant in Marion, South Dakota. The plant was built by Fagen, Inc. and utilizes ICM, Inc. technology. Upon completion, the investment will increase REX’s overall ownership interest of annual nameplate capacity ethanol production by approximately 33%. REX intends to fund its initial investment from cash on hand, and at April 30, 2010, REX had cash and cash equivalents of $101.4 million, including $86.1 million of cash at the parent company.
This represents the seventh ethanol plant investment for the electronics retailer, which first got into the ethanol business in December of 2006 by investing $14 million in Millennium Ethanol for a plant also located in Marion, South Dakota.