– Transaction marks Pinnacle's entry into the Southeast U.S. fibre basket, increases the Company's annual production capacity by approximately 270,000 metric tons and establishes a platform for future growth –

VANCOUVER, Sept. 6, 2018 /CNW/ - Pinnacle Renewable Holdings Inc. ("Pinnacle" or the "Company") (TSX: PL) today announced that it has entered into a definitive agreement to acquire a 70 percent interest in an operating industrial wood pellet production facility located in Aliceville, Alabama (the "Aliceville Facility") from The Westervelt Company ("Westervelt"), a diversified land resources company. Westervelt will retain a 30 percent interest in the Aliceville Facility.

The Aliceville Facility has an annual production capacity of approximately 270,000 metric tons of industrial wood pellets. Approximately 210,000 metric tons per annum is committed under a long-term off-take contract to a major European utility. The remaining production volume from the Aliceville Facility will be sold through Pinnacle's contracted backlog of long-term, take-or-pay off-take contracts. Run-rate EBITDA¹ per metric ton is expected to be in line with Pinnacle's other production facilities and the capital cost of the Aliceville Facility will be within Pinnacle's target range of 4.0x to 5.5x run-rate EBITDA¹.

Westervelt is currently ramping up production at the Aliceville Facility. Pinnacle is partnering with Westervelt to optimize asset configuration, distribution logistics and fibre supply.

"Our acquisition of a majority stake in this facility will increase our production capacity and establishes a platform for Pinnacle's future growth in the U.S. Southeast, one of North America's key fibre baskets. Geographic diversification of our asset base provides us with enhanced flexibility to cost-effectively allocate supply to our customers in Europe and Asia," said Robert McCurdy, Chief Executive Officer. "Through this transaction, we are also pleased to form a partnership with Westervelt, a leading forestry and land resource company in the region. We look forward to working with Westervelt to optimize the production capacity and operating efficiencies at the Aliceville Facility, and to jointly explore other potential future growth opportunities in Alabama and Mississippi."

"Our mutual dedication to safety, environmental responsibility, quality and our people provides a strong foundation for our partnership," said Brian Luoma, President and CEO of The Westervelt Company. "Where Pinnacle brings decades of pellet industry experience, we bring generations of land stewardship and management, our core business competencies. This was a natural partnership because of our shared values, and because this joint venture takes advantage of synergies between the two companies."

As part of the transaction, and consistent with Pinnacle's operating strategy, the Aliceville Facility has now entered into long-term wood fibre supply contracts for residuals with several large local sawmills.  Westervelt's sawmill, located in Moundville, AL, will remain an anchor supplier, ensuring strong alignment between Pinnacle and Westervelt.

Pinnacle expects to fund the purchase of its 70 percent stake in the Aliceville Facility through a draw on its credit facility and cash on hand. The purchase will provide accretive free cash flow per share on an annualized basis. Pinnacle's debt to EBITDA¹ ratio for the next fiscal quarters will reflect this acquisition investment and Pinnacle's new production facility additions, but will be in line with Pinnacle's target of under 3.3x as commissioning progresses and production is ramped up at the new facilities. The transaction, which is subject to customary closing conditions, is expected to close in early October 2018.

Conference Call
Robert McCurdy, CEO, Leroy Reitsma, President & COO, and Andrea Johnston, CFO, will host a conference call for investors and analysts to discuss the Aliceville Facility acquisition on Friday, September 7, 2018 at 1:00 pm (ET).

The dial-in numbers for the conference call are (416) 764-8609 or 1-888-390-0605. A live webcast of the call will be accessible via Pinnacle's website at: http://pinnaclepellet.com/investors/presentations-events  

The webcast will be archived following conclusion of the call.

To access a replay of the conference call dial (416) 764-8677 or 1-888-390-0541, passcode: 445022 #. The replay will be available until September 7, 2018 11:59 PM.

About Westervelt
The Westervelt Company, a privately held company headquartered in Tuscaloosa, Ala., was founded in 1884 and is currently under the fourth generation of family leadership. Westervelt is an industry leader in land management, wood products manufacturing and environmental mitigation. The company is recognized for excellence in sustainable forest management, responsibly sourced forest products and services, natural resource stewardship and ecosystem conservation. With more than half a million acres of land under Westervelt management, Westervelt's diverse businesses all work together to ensure the sustainable stewardship of natural resources today, tomorrow and for many generations to come.

About Pinnacle
Pinnacle is a rapidly growing industrial wood pellet manufacturer and distributor and the third largest producer in the world. The Company produces sustainable fuel for renewable electricity generation in the form of industrial wood pellets. This fuel is used by large-scale thermal power generators as a greener alternative to produce reliable baseload renewable power. Pinnacle is a trusted supplier to its customers, who require reliable, high quality fuel supply to maximize utilization of their facilities. Pinnacle takes pride in its industry leading safety practices. The Company operates seven industrial wood pellet production facilities in western Canada, a port terminal in Prince Rupert, B.C., and currently has a new production facility under construction in Smithers, B.C. Pinnacle has entered into long-term take-or-pay contracts with utilities in the U.K., Europe and Asia that represent 106% of its production capacity through 2021 and 98% of its production capacity through 2026.

Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable securities laws in Canada. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Examples of such forward-looking information that are contained in this news release include, but are not limited to, statements regarding satisfaction of the conditions to the completion of the transaction with Westervelt in a timely manner and the anticipated benefits of the transaction. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. If any of the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those expressed in the forward-looking information. The Company has no obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including uncertainties related to the realization of the anticipated benefits of the transaction with Westervelt, general economic and business conditions, product selling prices, changes in foreign-currency exchange rates and other factors described in "Risk Factors" which are described in the Company's Annual Information Form ("AIF") filed March 27, 2018 on SEDAR.

We caution that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect our results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See "Forward-looking Information" and "Risk Factors" in the Company's most recent AIF and its Management's Discussion & Analysis for the fiscal first quarter ended March 30, 2018 available on SEDAR (www.sedar.com) for a discussion of the uncertainties, risks and assumptions associated with these statements. 

SOURCE Pinnacle Renewable Holdings Inc.

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