Investment in Unconsolidated Subsidiary

3 Months Ended

Apr. 04, 2015

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Subsidiaries

The Company announced on January 21, 2011 that a wholly-owned subsidiary of Darling entered into a limited liability company agreement with a wholly-owned subsidiary of Valero Energy Corporation (“Valero”) to form Diamond Green Diesel Holdings LLC (the “DGD Joint Venture”). The DGD Joint Venture is owned 50% / 50% with Valero and was formed to design, engineer, construct and operate a renewable diesel plant (the “DGD Facility”), which is capable of processing approximately 11,000 barrels per day of input feedstock to produce renewable diesel fuel and certain other co-products, and is located adjacent to Valero's refinery in Norco, Louisiana. The DGD Joint Venture reached mechanical completion and began the production of renewable diesel in late June 2013.

On May 31, 2011, the DGD Joint Venture and Diamond Green Diesel LLC, a wholly-owned subsidiary of the DGD Joint Venture (“Opco”), entered into (i) a facility agreement (the “Facility Agreement”) with Diamond Alternative Energy, LLC, a wholly-owned subsidiary of Valero (the “Lender”), and (ii) a loan agreement (the “Loan Agreement”) with the Lender, which provided the DGD Joint Venture with a 14 year multiple advance term loan facility of approximately $221.3 million (the “JV Loan”) to support the design, engineering and construction of the DGD Facility, which is now in production. The Facility Agreement and the Loan Agreement prohibit the Lender from assigning all or any portion of the Facility Agreement or the Loan Agreement to unaffiliated third parties. Opco has also pledged substantially all of its assets to the Lender, and the DGD Joint Venture has pledged all of Opco's equity interests to the Lender, until the JV Loan has been paid in full and the JV Loan has terminated in accordance with its terms.

In addition to the DGD Joint Venture, the Company has investments in other unconsolidated subsidiaries that were acquired in the VION Acquisition that are insignificant to the Company. Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):



(in thousands)	March 31, 2015		December 31, 2014
Assets:
Total current assets	$	213,811	$	216,991
Property, plant and equipment, net	364,598		373,117
Other assets	1,546		2,092
Total assets	$	579,955	$	592,200
Liabilities and members' equity:
Total current portion of long term debt	$	60,289	$	57,514
Total other current liabilities	17,765		21,313
Total long term debt	148,242		155,273
Total other long term liabilities	350		339
Total members' equity	353,309		357,761
Total liabilities and member's equity	$	579,955	$	592,200



	Three Months Ended
(in thousands)	March 31, 2015			March 31, 2014
Revenues:
Operating revenues	$	116,728		$	119,657
Expenses:
Total costs and expenses	117,044			105,901
Operating income/(loss)	(316		)	13,756
Other income	20			18
Interest and debt expense, net	(4,156		)	(4,426		)
Net income/(loss)	$	(4,452	)	$	9,348

As of April 4, 2015 under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $176.7 million on the consolidated balance sheet and has recorded approximately $2.2 million in equity net loss and $4.7 million in equity net income in the unconsolidated subsidiary for the three months ended April 4, 2015 and March 29, 2014, respectively. In addition, subsequent to April 4, 2015, the Company received a $25.0 million dividend distribution from the DGD Joint Venture.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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