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Abengoa’s Two Nebraska Ethanol Plants Have Restarted | KTIC Radio

Abengoa’s Two Nebraska Ethanol Plants Have Restarted

Two Nebraska ethanol plants in Ravenna and York have restarted production as their parent company Spain-based Abengoa SA continues efforts to reorganize through Chapter 11, according to a document filed in the U.S. Bankruptcy Court for the Eastern District of Missouri in St. Louis.

As of May 20, the plants were operating at or near full production as the company continues to negotiate with alternative natural gas suppliers, “in an effort to save substantial amounts on the natural gas consumed at the newly restarted plants,” according to a recent court filing.

Abengoa announced it will sell its ethanol assets as part of a restructuring. The company said in court documents that “marketing efforts” by Abengoa’s financial adviser have been successful, saying there has been “considerable expressions of interest for the debtors’ assets.”

Nebraska grain companies caught up in the bankruptcy are owed some $35 million in cash for undelivered grain to the Nebraska plants.

Creditors in the ongoing proceedings originally objected to what is called in bankruptcy court as “debtor-in-possession financing,” which is often used for a company to try to restart production at a facility or keep it operating until the operation can be either sold or restructured.

Abengoa received $41 million in financing, part of which was used to restart production at the plants. Creditors had argued the plants could not produce at a profit in a low-to-negative margin environment.

Creditors Gavilon Grain LLC; Farmers Cooperative Association in Ravenna; Farmers Cooperative in Dorchester, Nebraska; the Anderson’s Inc. and Central Valley Ag Cooperative, previously argued Abengoa is using the Ravenna plant as collateral for debtor-in-possession financing and thus would put the facility at risk for post-bankruptcy liens and other credit problems.

Under the bankruptcy court, some of Abengoa’s financing conditions include using proceeds generated from restarted production at the Nebraska plants. Abengoa also owns ethanol plants in Colwich, Kansas, and Portales, New Mexico. Abengoa also owns a cellulosic ethanol plant in Hugoton, Kansas.

Production was halted at the Ravenna plant in November 2015 as a result of a lack of working capital and a decline in ethanol and gasoline prices.

Abengoa SA, the Spanish-based parent company, recently announced a restructuring plan to allow the company to continue operating. Part of that plan was to sell off ethanol assets in the United States and other countries.

In addition, Abengoa has asked the court for a 90-day extension on a deadline for the company to assume or reject unexpired leases.

Without the court’s intervention, Abengoa’s leases would be deemed automatically rejected as of June 23, 2016.

An extension is important, the company argues because one of the leases is of the Abengoa headquarters in St. Louis. Bankruptcy law provides unexpired leases of nonresidential real property to be deemed rejected and surrendered to the lessor. Abengoa said it maintains a staff at the headquarters as part of ongoing bankruptcy proceedings.

“The headquarters is a vitally important hub of the debtors’ operations,” the company argues in court documents. “At the same time, at the present stage of these Chapter 11 cases, the debtors are in the midst of their marketing efforts and the outcome of this process will impact debtors’ decision to assume, reject or assign the headquarters’ lease, as well as other leases.”

 

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