Judge Sets August Auction for Abengoa US Ethanol Plants

June 16, 2016
| In the News

By Jacqueline Palank
Bankruptcy & Debt – Dow Jones

A bankruptcy judge cleared the way for the speedy sale of Spanish renewable energy firm Abengoa SA’s U.S. ethanol plants, which have already garnered $350 million worth of bids.

Judge Kathy A. Surratt-States of the U.S. Bankruptcy Court in St. Louis Wednesday authorized Abengoa Bioenergy US Holding LLC to hold an Aug. 22 auction for its Midwestern ethanol plants, which company advisers expect to be competitive.

Abengoa investment banker Christopher Wu, a partner with Carl Marks Advisors, told The Wall Street Journal that “a wide group of potential buyers” are interested in the plants, including existing ethanol producers as well as companies that don’t currently produce the biofuel but transport or sell it.

“There’s a recognition that ethanol is here to stay and that it’s a clean renewable source with strong infrastructure in America,” Mr. Wu said Thursday.

Abengoa SA, of Seville, Spain, designs, builds and operates clean-energy projects. Proceedings are under way in Spanish and U.S. courts to restructure a multibillion-dollar debt load and shed noncore assets, including the Midwest ethanol plants.

After several months of marketing, Abengoa Bioenergy US Holding recently lined up stalking horse, or lead, bids from three buyers for four plants. Green Plains Inc. of Omaha, Neb., which operates 14 plants and has an ethanol-marketing unit, has offered $200 million in cash for plants in Mount Vernon, Ind., and Madison, Ill., court papers show.

An affiliate of plant operator KAAPA Ethanol LLC of Minden, Neb., bid $115 million in cash for a Ravenna, Neb., plant. Houston-based BioUrja Trading LLC, an ethanol-marketing firm that doesn’t have production operations, has offered $35 million in cash for a York, Neb., plant. These two plants were closed late last year due to lack of funding, but their owners’ bankruptcy filing allowed them to obtain financing to restart operations.

All of the cash purchase prices are subject to adjustments, and the bids also include various liabilities.

Rival bids are due Aug. 18, and Mr. Wu said that the company would consider bids for individual plants or for combinations of plants. Potential buyers have expressed interest in acquiring three or more plants, he added. Judge Surratt-States will review the winning bids at an Aug. 29 sale hearing, court papers show.

Two shuttered plants, in Colwich, Kan., and Portales, N.M., under the Abengoa Bioenergy US Holding umbrella, are also up for sale, Mr. Wu said.

“Colwich and Portales offer the opportunity to buy, at a meaningful discount, operating facilities that can be used for a variety of purposes, including ethanol production or other chemical products,” he said.

The sales represent continued consolidation in the cyclical ethanol industry, Mr. Wu said. Large producers have led such activity, though he said midsize companies are taking note.

“It’s not very often a relatively large player like Abengoa is for sale, and so the opportunities to consolidate that much production capacity are few and far between,” he said. “We’re seeing that in our auction process.”

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