Stobart Group has taken a controlling interest in a newly formed company, Stobart Biomass Products (SBPL), alongside wood-based biomass supplier AW Jenkinson Forest Products (AWJFP).
The company says it will source and distribute biomass supplies to the UK's renewable energy market, on a long-term contract – suggesting that "the market for biomass could grow tenfold in the next three to four years".
In financial terms, Stobart expects to benefit from £30m per annum in transport revenues from SBPL within three years.
Under the terms of the deal, Stobart takes a controlling interest in the new venture, comprised of £15m cash and the remainder 11,278,195 new ordinary shares in Stobart Group.
The first major contract is for the supply of up to 750,000 tonnes of biomass fuel a year to 10 sites over the next 20 years.
In addition, SBPL has received contract enquiries for a further 14 million tonnes of biomass fuel over the next five years, with all new contracts going through SBPL.
Andrew Tinkler, CEO of the Stobart Group, says: "This investment and transport contract together are a strategic building block for the Stobart Group."
And he adds: "It gives us access to, and income from, the higher margin renewable energy market. Partnering with the market leader will enable us to exert greater control and move up and down the supply chain as this market diversifies.
"Just as we have proven with other recent investments, SBPL will become a strategic asset and platform for the development and growth of the Stobart business."
