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Green Plains enters merger agreements

By Staff | May 9, 2008

Plans to join with VBV LLC and subsidiaries

OMAHA, Neb. — Green Plains Renewable Energy, Inc. and VBV LLC, together with its subsidiaries, Thursday announced that they have entered into a definitive merger agreement.

Upon closing, the companies will combine, creating a vertically-integrated ethanol company with expected operating capacity of 330 million gallons of ethanol per year.

The proposed merger is expected to be accretive to Green Plains’ earnings beginning in fiscal year 2009. The transaction is anticipated to close by late summer, subject to various shareholder and equity holder approvals, and customary lender and regulatory consents.

“The proposed merger will create one of the nation’s largest publicly-traded ‘pure play’ ethanol companies, based on projected year-end capacity,” said Wayne Hoovestol, Green Plains’ chief executive officer. “Both companies will benefit from the increased scope, scale and critical mass afforded by this merger, which will substantially increase revenues, add value to existing enterprises and create new opportunities for growth. We are stronger and more diverse as a combined company, and we believe this is in the best interest of all stakeholders.”

VBV holds majority interest in two companies that have ethanol plants under construction: Indiana Bio-Energy, LLC (“IBE”) of Bluffton, Ind.; and Ethanol Grain Processors, LLC, (“EGP”) of Obion, Tenn.

Both plants are expected to be completed in the fall of 2008. Once operational, the plants are expected to each produce at least 110 million of gallons of ethanol per year.

Upon closing, VBV, Indiana Bio-Energy and Ethanol Grain Processors will be merged into subsidiaries of Green Plains. Current equity holders of VBV, IBE and EGP will receive Green Plains’ common stock and options totaling 11,139,000 shares.

VBV’s equity holders include subsidiaries of NTR plc, an international renewable energy and sustainable waste management company, and Wilon Holdings S.A., a Switzerland-based investment group.

Simultaneously with the closing of the merger, certain of VBV’s equity holders will invest $60 million in Green Plains’ common stock at a price of $10 per share, or an additional 6 million shares. This additional investment is expected to be used for general corporate purposes and to finance future acquisitions.

At current market prices, the transaction is valued at approximately $383 million, which includes $212 million of IBE and EGP projected debt upon completion of the ethanol plants, $60 million in equity investment and $111 million in new equity issued.

Upon closing, Hoovestol will remain Chief Executive Officer for a transition period of up to one year. Todd Becker, VBV’s chief executive officer, will initially serve as Green Plains’ president and chief operating officer and then become Green Plains’ chief executive officer. These appointments are subject to the discretion of Green Plains’ board of directors. Employees of both companies will be integrated into a combined workforce. Green Plains’ corporate headquarters will remain in Omaha, NE. Common stock will continue to trade under Green Plains’ existing ticker symbol, GPRE.

Pursuant to the terms and conditions of the merger, the combined company will be governed by a nine-member board of directors. Initially, Green Plains and NTR will each designate four individuals to the board. Wilon Holdings will designate one director.

“VBV and Green Plains share a common philosophy and vision,” said Becker. “Both companies believe that vertical integration – from corn procurement through ethanol production, marketing and distribution – is the best strategy to minimize risk, reduce cost and increase efficiency. We also share an aggressive strategy for growth through acquisitions.”

“This combination matches two progressive ethanol producers, creating a solid platform for future growth,” said Jim Barry, NTR’s chief executive officer. “This merger accumulates strategic assets and joins complementary operations. More importantly, it assembles a combined management team of unparalleled talent, leadership ability and commodity expertise. By unifying operations and management, along with the additional capital investment, new opportunities for integration and consolidation should emerge. Our equity infusion is evidence of our long-term commitment to the company and the ethanol industry.”

The combined company will integrate VBV’s assets with Green Plains’ current ethanol production, grain storage, agronomy, seed, feed, fertilizer and petroleum businesses. In addition to the production assets, VBV’s management team has a proven track record in ethanol marketing and production.

“Seasoned industry veteran Steve Bleyl will be leading the ethanol marketing, blending and distribution efforts,” said Becker. “This transaction will accelerate these efforts.”

“With the addition of VBV’s production capacity and capital resources, Green Plains is well positioned for strategic growth in the ethanol industry,” Becker added. “This merger is the product of our common goal to grow our business and enhance shareholder value over the long-term.”

VBV was advised by XMS Capital Partners in connection with this transaction. Green Plains was advised by Duff and Phelps LLC. VBV is represented by the law firm of Stoel Rives. Green Plains is represented by the law firm of Husch Blackwell Sanders.

Additional Information

The proposed merger will be submitted to both Green Plains’ shareholders and VBV subsidiaries’ members for their consideration. Green Plains will file a registration statement with the SEC, which will include a proxy statement/prospectus regarding the proposed merger.

Green Plains and VBV, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from the shareholders of Green Plains and from the VBV subsidiaries’ members in connection with the proposed merger transactions. Information about the directors and executive officers of Green Plains is set forth in the proxy statement for Green Plains’ 2008 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 18, 2008. Additional information regarding the interests of those participants and other persons who may be deemed participants in the merger transactions may be obtained by reading the proxy statement/prospectus regarding the proposed merger when it becomes available. You may obtain free copies of these documents as described in the preceding paragraph.