Virginia Based Osage Bio Energy Receives $300 Million Commitment from Leading Private Equity Firm

GLEN ALLEN, Va.--(BUSINESS WIRE)--Osage Bio Energy has received a commitment of $300 million from First Reserve Corporation, the world’s leading energy-focused private equity firm, to fund the construction of four next generation bio-refining facilities that will produce ethanol and a specialty protein feed.

“First Reserve has unparalleled depth, breadth and experience in the energy industry.”

Osage Bio Energy is headquartered in Glen Allen, VA, and was founded in January 2007 by Earle Spruill and Craig Shealy to pursue the development of the United States’ first major barley to ethanol production facilities. Osage Bio Energy is the sister company of Osage, Inc. (Roanoke, VA), the largest independent distributor of motor-fuel grade ethanol in the Southeast, with current throughput of approximately 100 million gallons per year.

“We are extremely excited about this milestone and our partnership with First Reserve. Their commitment confirms the validity of Osage Bio Energy’s unique business model and provides us the financial resources, as well as industry expertise, to make our plans a reality,” said Craig Shealy, President & CEO of Osage Bio Energy. “First Reserve has unparalleled depth, breadth and experience in the energy industry.”

“Osage Bio Energy offers First Reserve the opportunity to build on its existing knowledge and background in the alternative energy sector,” said Glenn Payne, Director at First Reserve Corporation. “The competitive pricing position derived from using a barley-fed plant combined with the lack of ethanol supply to the Southeast, makes Osage Bio Energy an attractive investment for us. They are a world class team, using proven technology and a differential business model that is superior to any (of the many) that we have evaluated.”

Osage Bio Energy (OBE) is committed to operating as a sustainable, environmentally responsible company and will differentiate itself from traditional Midwestern corn-to ethanol production companies in several key ways.

First, the ethanol will primarily be produced from regionally grown barley and will be an Advanced Biofuel as defined by the Renewable Fuel Standard (RFS). Currently, in the Mid-Atlantic and Southeast nearly five million acres per year remain fallow in winter months. Barley is a winter crop that will be grown for the production of ethanol and does not compete for land for food production. It is environmentally superior to corn because it requires less fertilization and prevents nutrient runoff in winter months. The use of barley reduces the transportation requirements of moving Midwestern corn and enhances the yield of locally grown summer crops, especially soybeans. In addition, the co-product of barley-based ethanol, a protein meal, is superior feed supplement for local cattle, poultry and swine.

Second, OBE has negotiated an exclusive agreement with KATZEN International, Inc., one of the leading and oldest privately held process design and technology company in the biofuels industry. The arrangement allows for exclusive use of KATZEN technology capable of producing ethanol from barley within a 200-mile radius of each plant site.

Third, OBE’s site selection model provides significant energy balance advantages over corn- based ethanol, especially in the Mid-Atlantic and Southeast. OBE is committed to maximizing the opportunity to produce a truly renewable fuel by partnering with existing steam producers, utilizing its own waste products for energy and procuring locally grown biomass.

To execute the company’s strategic plan, OBE has assembled a high caliber team and is pleased to announce the appointment of the following senior executives:

Joel Stone, Chief Operating Officer: Mr. Stone is a 30-year veteran of the ethanol and food ingredient industries, including positions as Chief Operating Officer for both ASAlliances Biofuels and Abengoa Bioenergy Corporation. One of the first plants Stone was involved with was the first barley-to-ethanol facility constructed in the United States in the early 1980s. He holds a B.S. in Chemical Engineering from Virginia Polytechnic University and an M.S. in Chemical and Biochemical Engineering from the University of Pennsylvania.

Andy Weaver, Chief Financial Officer: Mr. Weaver brings more than 20 years of financial management experience across a variety of industries, including Krayton Polymers, Reliant Energy and Coca-Cola. Weaver is a Certified Public Accountant and holds both a B.B.A. and M.S. in Finance from Texas A&M University.

Patrick Simms, Senior Vice President of Operations: Mr. Simms has more than 20 years of senior level experience in process and product development, and commercialization of industrial biotechnology. He has worked for Diversa (now Verenium), Biosys, and Genencor and prior to his biotech career, Simms spent 18 years in the grain processing industry, where he managed one of the first ethanol facilities in the Southeast. He holds a B.S. degree in Chemical Engineering from West Virginia University.

“We have a highly experienced management team and a world-class financial and strategic partner in First Reserve,” said Shealy. “Together, we are moving forward with our plans to create the next generation of integrated bio-refining operations, starting right here in Virginia.”

About First Reserve

First Reserve is the world’s leading private equity firm in the energy industry. Throughout its 25-year history of investing solely in the global energy industry, First Reserve has developed a strong franchise, utilizing its broad base of specialized industry knowledge as an advantage. First Reserve believes that strategic diversification across a wide range of energy industry sectors has been a major contributor to the long-term, superior investment record achieved by the First Reserve Funds across economic cycles. Further information is available at www.firstreserve.com.

First Reserve has an active investment program in the renewable energy sector and has invested in a number of companies covering biofuels; waste to energy; CO2 offset origination; and solar and wind generation. With over $1.2 billion invested and committed to alternative and renewables companies, First Reserve is one of the largest investors in renewable energy and is targeting up to 15% of funds under management to this sector.