MARQUETTE - Reaction has been positive to an announcement Thursday that terms have been reached to sell the renewaFUEL biofuel plant at K.I. Sawyer.
Cliffs Natural Resources Inc. officials said in a news release that the assets of the operation had been sold to RNFL Acquisition LLC, an investor group that includes renewaFUEL's minority partners.
Terms of the deal were not disclosed.
Work is expected to be ongoing over the next four to six months to revamp renewaFUEL at K.I. Sawyer. A deal was announced Thursday selling the company’s assets to a Minnesota-based investor group, RNFL Acquisitions LLC. Company officials hope to rehire some of the workers previously employed at the biofuel production plant. (Journal file photo)
The new owners said the Minnesota-based company will retain the renewaFUEL brand name and hope to have the plant retooled and up and running within the next four to six months.
"We're really pleased to have closed the transaction with renewaFUEL and we're excited about getting in there and getting the plant operational," said Jim Mennell, chief executive officer of RNFL Acquisitions.
County officials were also happy about the news the deal had closed.
"It will mean jobs for that part of the county and that's always good news for Marquette County," said Marquette County Board Chairwoman Deborah Pellow.
Marquette County Interim Administrator Scott Erbisch said Marquette County is pleased to see that the deal has been finalized to sell the renewaFUEL assets and operations.
"Once fully operational, RNFL Acquisition, LLC will employ over 20 direct employees, and create additional spin-off jobs in the Upper Peninsula's trucking and biomass industry," Erbisch said. "This is very important economically to Marquette and the region."
The county board recently approved reassigning leases at K.I. Sawyer for two buildings and associated parking areas to the new company. The board also approved a six-month rent waiver for the company.
On Tuesday, the board voted to approve some minor language revisions in the lease reassignment documents, which helped clear the way for the deal to close.
Over the past weekend, the parties worked to come to terms, but hadn't.
At Tuesday's meeting, Commissioner Michael Quayle didn't support the revisions and wanted to revisit his vote from the previous week to approve the six-month rent abatement. Quayle balked at language in the agreement that said the county "has had sufficient time to consider the terms of this assignment, and to investigate the assignee, including its financial viability and security profile."
"We're saying we did due diligence and I don't think we did," Quayle said.
Erbisch told the board he had checked the company out through Dun and Bradstreet financial reports and found no liens, lawsuits or risks for non-payment. He said the parent investor company involved had $3 million in assets available according to a recent statement.
Commissioner Paul Arsenault said there was no real downside to the county supporting the effort. If the plant didn't sell, he said Cliffs would liquidate the assets and there would be no company operating in the renewaFUEL space at K.I. Sawyer.
"I think this is an opportunity," Arsenault said.
Commissioner Jim Cihak agreed.
"Quite frankly, I think the risks to the county are extremely limited here," Cihak said.
Commissioner Bill Nordeen said the only thing the county is risking by supporting the renewed renewaFUEL effort is the loss of rental revenue, which he described as "a small price to pay."
In September, after renewaFUEL's inability to generate products at designed capacity, parent company Cliffs Natural Resources suspended operations and later began looking for potential buyers.
The $19 million facility opened in 2010 and was expected to produce 150,000 tons of biomass cubes per year, using sustainably collected wood and agricultural feedstocks, for Cliffs' Michigan operations and other entities, including the Marquette Board of Light and Power.
Mennell said the new company currently does not have any contracts in place for sales of the renewaFUEL biomass product. He said the company will focus on sales, potentially to Cliffs, the BLP and others, after efforts to get the plant operating have been completed.
John Pepin can be reached at 906-228-2500, ext. 206.