REG Geismar redeems and pays off $100m GOZone bonds ahead of maturity

US biofuels producer Renewable Energy Group (REG) has redeemed in full of the $100 million (€88.7m) Gulf Opportunity Zone (GOZone) bonds ahead of their 2033 maturity date.

The bonds were issued by the Louisiana Public Facilities Authority (LPFA) to help finance construction of the company’s 75 million gallon renewable hydrocarbon diesel refinery in Geismar, Louisiana.

In connection with the redemption, the company’s subsidiary, REG Geismar, prepaid all amounts owing under its loan agreement with the LPFA.

The redemption was funded through a drawing on a letter of credit issued to the bond trustee that was fully collateralised with cash prior to the redemption.

“We redeemed the GOZone bonds prior to maturity with restricted cash to reduce our long-term debt and to eliminate costs associated with the bonds,” said Chad Stone, CFO at REG.

REG acquired the Geismar biorefinery, which produces renewable naphtha and renewable LPG in addition to renewable diesel, in June 2014. 

The GOZone bonds were established in December 2005 to revitalise the US Gulf Coast region’s economy after it was devastated by several hurricanes in the same year, including infamous Katrina that flooded the city of New Orleans.