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Abengoa Fights DOE Over Tax Dollars | KTIC Radio

Abengoa Fights DOE Over Tax Dollars

Abengoa Fights DOE Over Tax Dollars

Spain’s renewable-energy giant Abengoa S.A. is fighting the U.S. Department of Energy’s effort to recover federal tax dollars that helped construct an $850 million ethanol plant and neighboring electricity plant in Kansas.

In court papers, lawyers for Abengoa Bioenergy Biomass of Kansas LLC, the Abengoa subsidiary behind the rural project, argued that, under the terms of the DOE’s investment, the U.S. government isn’t entitled to collect money for chipping in $95 million toward construction costs in 2007. The plant was never completed, and the property was sold last year for nearly $50 million, according to documents filed in U.S. Bankruptcy Court in Wichita, Kan.

On Friday, Abengoa lawyers asked Judge Robert Nugent to determine that the government’s contribution was an investment that doesn’t need to be paid back with a portion of the sale money. In court papers, they said that documentation outlining the terms of the DOE’s investment in the project “contains no repayment terms or payment enforcement rights; no maturity date; no interest provisions; and no other terms or conditions typical of a loan agreement.”

DOE officials have argued that the government is entitled to collect a portion of the ethanol plant’s sale money based on the percent of construction money that came from federal sources.

Abengoa officials asked Judge Nugent to set a July 12 hearing on the matter.

The dispute is the latest to arise as Abengoa copes with lingering financial troubles as one of the survivors of Spain’s devastated renewable-energy sector. Founded in 1941, Abengoa S.A. builds major solar, biofuel and wind projects, along with power lines.

During Spain’s economic crisis in early 2013, Abengoa struggled with a drop in corn ethanol prices and with cutbacks in government subsidies for solar and wind power companies.

“As a result of this deterioration in the market, a number of bioenergy facilities were forced to close,” Abengoa officials said in earlier court papers.

During its fight to survive, Abengoa borrowed more than $5 billion. Abengoa officials have negotiated repayment plans in a complicated process that has led several subsidiaries to use the U.S. bankruptcy system. In 2015, Abengoa had 577 subsidiaries around the world, according to court papers.

Abengoa officials who reviewed the company’s 200 projects worldwide in order to craft a survival strategy determined that the Hugoton, Kan., plant should be sold. After company officials contacted 212 potential buyers, the facility was sold to Synata Bio Inc. for $48.5 million on December 8.

 

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