Acquisitions and Equity Transactions

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Acquisitions and Equity Transactions

ACQUISITIONS AND EQUITY TRANSACTIONS

Imperium Renewables, Inc.

On August 19, 2015, the Company acquired substantially all the assets of Imperium Renewables, Inc. (Imperium), including the 100-million gallon nameplate biomass-based diesel refinery and deepwater port terminal at the Port of Grays Harbor, Washington. The results of Imperium's operations have been included in the consolidated financial statements since that date. The Company has not completed its initial accounting of this business combination as the valuation of real and personal property,intangible assets and deferred tax assets and liabilities has not been finalized.

The following table summarizes the consideration paid for Imperium:

	August 19, 2015
Consideration at fair value for Imperium:
Cash	$	36,748
Common stock	15,310
Contingent consideration	5,000
Total	$	57,058

The fair value of the 1,675,000 shares of Common Stock issued to Imperium was determined using the closing market price of the Company's common shares at the date of acquisition.

Subject to achievement of certain milestones related to the biomass-based diesel gallons produced and sold by REG Grays Harbor and whether the BTC is reinstated, Imperium may receive contingent consideration of up to $5,000 (Earnout Payments) over a two-year period after the acquisition. The Earnout Payments will be payable in cash. As of September 30, 2015, the Company has recorded a contingent liability of $5,000, approximately $2,167 of which has been classified as current on the Condensed Consolidated Balance Sheets.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

	August 19, 2015
Assets (liabilities) acquired of Imperium:
Cash	$	168
Accounts receivable	8,274
Inventory	18,989
Other current assets	87
Property, plant and equipment	46,476
Intangible assets	2,900
Total identifiable assets acquired	76,894
Accounts payable	(4,828		)
Accrued expenses and other liabilities	(942		)
Debt	(5,225		)
Deferred tax liabilities	(3,483		)
Total liabilities assumed	(14,478		)
Net identifiable assets acquired	62,416
Less: Bargain purchase gain	5,358
Net assets acquired	$	57,058

Imperium was acquired at a price less than fair value of the net identifiable assets, and the Company recorded a provisional net of tax bargain purchase gain of $5,358, which may be subject for future adjustments. The bargain purchase gain is reported in the "Other Income, Net" line on the Condensed Consolidated Statements of Operations. Prior to recognizing a bargain purchase gain, the Company reassessed whether all assets acquired and liabilities assumed had been correctly identified as well as the key valuation assumptions and business combination accounting procedures for this acquisition. After careful consideration and review, the Company concluded that the recognition of a bargain purchase gain, while still provisional at the date of this report, was appropriate for this acquisition. Factors that contributed to the bargain purchase price were:

•The assets were not fully utilized by the seller and that the transaction was completed with a motivated seller that appeared to have recapitalized its investments and desired to exit the facilities that no longer fit its strategy given the uncertainties in the industry.

• The Company was able to complete the acquisition in an expedient manner, with a cash payment, stock issuance and without a financial contingency, which was a key attribute for the seller. The relatively small size of the transaction for the Company, the lack of required third-party financing and the Company's expertise in completing similar transactions in the past gave the seller confidence that the Company could complete the transaction quickly and without difficultly.

• Due to the unique nature of the products and limited number of potential buyers for this business, the seller found it advantageous to accept the Company's purchase price based upon our demonstrated ability to operate similar businesses, and financial strength that may enable the Company to make improvement and run the business at increased production rates in the long run.

The following pro forma condensed combined results of operations assume that the Imperium acquisition was completed as of January 1, 2014.

	Three Months   Ended   September 30,   2015			Three Months   Ended   September 30,   2014		Nine Months   Ended   September 30,   2015			Nine Months   Ended   September 30,   2014
Revenues	$	420,336		$	443,677	$	1,117,705		$	1,058,854
Net income (loss)	(16,211		)	7,929		(58,259		)	12,038
Basic net income (loss) per share	$	(0.36	)	$	0.18	$	(1.28	)	$	0.29

Petrotec AG

On December 24, 2014, the Company acquired 69.08% of the outstanding common shares and voting interest of Petrotec. The results of Petrotec’s operations have been included in the consolidated financial statements since that date. The Company has not completed its initial accounting for this business combination as the valuation of the real and personal property and goodwill has not been finalized.

The following table summarizes the consideration paid for Petrotec:

	December 24, 2014
Consideration at fair value for Petrotec:
Common stock	$	20,022

The fair value of the 2,070,538 shares of the Company's Common Stock issued for the acquisition was determined on the basis of the closing market price of the Company's Common Stock at the date of acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

	December 24, 2014
Assets (liabilities) acquired of Petrotec:
Cash	$	13,523
Accounts receivable	4,989
Inventory	9,470
Other current assets	3,583
Property, plant and equipment	25,026
Total identifiable assets acquired	56,591
Accounts payable	(8,171		)
Accrued expenses and other liabilities	(2,151		)
Debt	(16,192		)
Non-current liabilities	(1,462		)
Total liabilities assumed	(27,976		)
Net identifiable assets acquired	28,615
Goodwill	369
Non-controlling interest	(8,962		)
Net assets acquired	$	20,022

The $369 of goodwill was assigned to the Biomass-based diesel segment, all of which is expected to be deductible for income tax purposes.

At December 24, 2014, the fair value of the 30.92% noncontrolling interest in Petrotec was estimated to be $8,962. The fair value of the noncontrolling interest was estimated using a combination of the income approach and a market approach.

The Company recognized $1,289 of acquisition-related costs that were expensed in the last quarter of 2014. In addition, during the nine months ended September 30, 2015, the Company acquired additional common shares of Petrotec as part of the cash tender offer and open market purchases for $4,416. At September 30, 2015, the Company owned 85.93% of the outstanding common shares and voting interest of Petrotec.

In April 2015, Petrotec's application to de-list its shares of common stock from the Frankfurt Stock Exchange was approved. From the end of the October 8, 2015 trading day, Petrotec's shares of common stock are no longer traded on any regulated market of any stock exchange.