Print
E-mail
Aventine defaults on debt, may look at bankruptcy
By Mark Coddington
mark.coddington@theindependent.com
AURORA — Aventine Renewable Energy said it has defaulted on debt for construction of two ethanol plants, including one in Aurora, and may seek bankruptcy protection if it can’t raise enough funds to pay it off.
Aventine, which also owns Aurora’s existing plant, said in its quarterly earnings report on Monday that it had received notice on March 9 that Kiewit Energy Co. of Houston had canceled its engineering, construction and procurement contracts for Aurora West and a plant in Mount Vernon, Ill.
The contract was canceled after Aventine failed to make a recent payment under the contract’s Dec. 31 change-order agreements.
As a result, Aventine owes Kiewit and its subcontractors the remainder of the payments due under the contract, valued on Feb. 28 at $24.4 million.
Aventine said it does not have enough cash to make that payment or a $15 million interest payment to its lenders due April 1.
The company said it is looking at several ways to raise capital, including finding additional financing or selling all or part of the company. But, it said, “there can be no assurance we will be successful.”
“If we cannot obtain sufficient liquidity in the very near term, we may need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code,” the report stated.
Aventine bought a majority share of Aurora’s 40 million-gallon-per-year plant in 2003. The company broke ground on Aurora West, an adjacent ethanol plant and industrial complex initially intended to produce 220 million gallons of ethanol per year, in September 2006. Construction there was delayed in October 2008 and suspended in November.
In Monday’s release, the company, based in Pekin, Ill., also reported a $36.9 million loss for the fourth quarter of 2008, compared with a $3.3 million profit a year earlier.
That loss came despite the sale of 277.9 million gallons of ethanol during the quarter, a company record.
The company reported that, as of Thursday, it had $700,000 in cash and $6.6 million in additional borrowing availability.
Kelly Grossnicklaus, head of risk management for Aurora Cooperative, noted on Tuesday that Aventine’s existing plant in Aurora is still operating normally. He said Aurora Co-op, the plant’s sole grain supplier, continues to work within its agreement with Aventine.
If Aventine were to go bankrupt, he said, it would be a completely different situation from the ones in Central City and Ord, where VeraSun Energy Corp.’s bankruptcy left farmers with unpaid grain contracts.
As the plant’s only grain supplier, Aurora Co-op — not Aventine — holds contracts with farmers, he said.
“The contract is not with Aventine; it’s not with the Nebraska Energy Cooperative,” Grossnicklaus said, referring to the plant’s former local minority owners. “The contract that the farmer has is with the Aurora Cooperative elevator, and there is no risk whatsoever for our producers.”
When asked whether Aurora Co-op would be at risk, Grossnicklaus said the company is working through those issues with Aventine.
Aurora Mayor Marlin Seeman said that, because the issue involves only private businesses, the city has no control over whether it may have a half-finished ethanol plant in Aurora.
“We’re just saddened by the turn of events, but we’re optimistic that, at some point, things turn around to the point where this is financially viable,” Seeman said.
Christian Evans, executive director of the Aurora Area Chamber and Development Corp., said he, too, is optimistic even if Aventine is ultimately unable to finish the new plant.
“Because it is such a great agricultural-industrial complex, we really are confident that, if it’s not Aventine, then someone will come in and finish it,” Evans said.
Aventine, which also owns Aurora’s existing plant, said in its quarterly earnings report on Monday that it had received notice on March 9 that Kiewit Energy Co. of Houston had canceled its engineering, construction and procurement contracts for Aurora West and a plant in Mount Vernon, Ill.
The contract was canceled after Aventine failed to make a recent payment under the contract’s Dec. 31 change-order agreements.
As a result, Aventine owes Kiewit and its subcontractors the remainder of the payments due under the contract, valued on Feb. 28 at $24.4 million.
The company said it is looking at several ways to raise capital, including finding additional financing or selling all or part of the company. But, it said, “there can be no assurance we will be successful.”
“If we cannot obtain sufficient liquidity in the very near term, we may need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code,” the report stated.
Aventine bought a majority share of Aurora’s 40 million-gallon-per-year plant in 2003. The company broke ground on Aurora West, an adjacent ethanol plant and industrial complex initially intended to produce 220 million gallons of ethanol per year, in September 2006. Construction there was delayed in October 2008 and suspended in November.
In Monday’s release, the company, based in Pekin, Ill., also reported a $36.9 million loss for the fourth quarter of 2008, compared with a $3.3 million profit a year earlier.
That loss came despite the sale of 277.9 million gallons of ethanol during the quarter, a company record.
The company reported that, as of Thursday, it had $700,000 in cash and $6.6 million in additional borrowing availability.
Kelly Grossnicklaus, head of risk management for Aurora Cooperative, noted on Tuesday that Aventine’s existing plant in Aurora is still operating normally. He said Aurora Co-op, the plant’s sole grain supplier, continues to work within its agreement with Aventine.
If Aventine were to go bankrupt, he said, it would be a completely different situation from the ones in Central City and Ord, where VeraSun Energy Corp.’s bankruptcy left farmers with unpaid grain contracts.
As the plant’s only grain supplier, Aurora Co-op — not Aventine — holds contracts with farmers, he said.
“The contract is not with Aventine; it’s not with the Nebraska Energy Cooperative,” Grossnicklaus said, referring to the plant’s former local minority owners. “The contract that the farmer has is with the Aurora Cooperative elevator, and there is no risk whatsoever for our producers.”
When asked whether Aurora Co-op would be at risk, Grossnicklaus said the company is working through those issues with Aventine.
Aurora Mayor Marlin Seeman said that, because the issue involves only private businesses, the city has no control over whether it may have a half-finished ethanol plant in Aurora.
“We’re just saddened by the turn of events, but we’re optimistic that, at some point, things turn around to the point where this is financially viable,” Seeman said.
Christian Evans, executive director of the Aurora Area Chamber and Development Corp., said he, too, is optimistic even if Aventine is ultimately unable to finish the new plant.
“Because it is such a great agricultural-industrial complex, we really are confident that, if it’s not Aventine, then someone will come in and finish it,” Evans said.
 |
 |
|
| Fire breaks out on Platte island near Shelton | Asphalt plant denied |
Commenting is currently disabled on all stories. The Grand Island Independent is currently reviewing its guidelines for commenting on news stories.
Start a topic in our forums
Submit a Letter to the Editor
Start a topic in our forums
Submit a Letter to the Editor
