MINDEN — A wholly owned subsidiary of KAAPA Ethanol LLC of Minden has placed an initial bid of $115 million to purchase the Abengoa Bioenergy ethanol plant at Ravenna.
The KAAPA Ethanol bid is part of $360 million worth of initial bids lined up by Abengoa SA of Seville, Spain, for four U.S. plants the other three are in York, Mount Vernon, Ind., and Madison, Ill. in connection with its global restructuring to resolve bankruptcy proceedings in Spain and U.S. courts.
The proceedings involving the Ravenna plant are in the U.S. Bankruptcy Court in St. Louis.
The Ravenna plant was shut down for several weeks after its creditors filed lawsuits in February and was reopened after Abengoa secured a $41 million bankruptcy loan in late March.
A motion filed Sunday by Abengoa Bioenergy US Holdings LLC with the St. Louis bankruptcy court lists bids for the four plants and also says the Ravenna and York plants now are operating at or near full capacity, and are projected to have generated revenue of about $26.2 million for May 2016.
KAAPA Ethanol Chief Executive Officer Chuck Woodside confirmed to the Hub that KE Holdings LLC has made a “stalking horse,” or initial, bid of $115 million for Abengoa’s Ravenna plant.
“First of all, it’s a great strategic fit with our operations here (west of Minden),” Woodside said this morning, when asked why KAAPA Ethanol officials are interested in owning the Ravenna plant.
He listed as “potential synergies” the ability to spread out management overhead because of the proximity of the two plants.
“There’s a lot to be said for local ownership, right?” Woodside added.
The new Abengoa motion lists the other U.S. ethanol plant bidders as BioUrja Trading LLC of Houston, $45 million for the York plant, and Green Plains Inc. of Omaha, $200 million for the other two plants.
The motion outlines a process that could lead to an auction for the four U.S. plants. It lists a proposed Aug. 18 bid deadline, Aug. 22 auction and Aug. 25 hearing to review winning bids.
Woodside said the process must be court-approved.
A hearing on the motion is scheduled for 10 a.m. Wednesday in the U.S. Bankruptcy Court in St. Louis.
“We have no input on the schedule,” Woodside said, adding that if there is another bidder for the Ravenna plant, representatives of the bidders likely would have to appear in person at the auction site set by the court.
He said it is the court’s role to obtain the most money possible for Abengoa Bioenergy debtors and unsecured creditors, so the stalking-horse bids are used to set a floor for each plant’s sale.
If there are no other bids, the purchase by KE Holdings could move forward without an auction.
“We’re prepared, as a company, to move ahead as wholly owned,” Woodside said about the preferred ownership plan for the Abengoa plant at Ravenna, “and we think that makes sense.”
Since first producing ethanol in November 2003 at the rural Minden plant, which now has an annual processing capacity of 80 million gallons, KAAPA Ethanol has added ownership in processing plants at Janesville, Minn., Hankinson, N.D., and Lima, Ohio.
Woodside explained that while KAAPA Ethanol buys the plants, it owns them with other partners, primarily farm groups similar to KAAPA. KAAPA Ethanol does not do the daily direct management of those plants, which have a combined production of 132 million gallons.
The possibility of buying a Nebraska facility near the original KAAPA Ethanol plant is of even more interest.
If KAAPA Ethanol is able to purchase the Ravenna plant, total capacity of the company’s holdings would be just more than 300 million gallons.
Woodside laughed when asked if any KAAPA leaders could have imagined that when they started looking for ways to add value to south-central Nebraska corn about 20 years ago.
He said the recent purchase of the Lexington ethanol plant by Hastings-based Chief Ethanol as another sign that consolidation likely will continue in the ethanol industry.
Woodside said that if KAAPA Ethanol officials had not gone into collaboration with other groups to purchase the out-of-state plants, they would not be in the position today to bid for ownership of the Ravenna plant.
There is a lot to work to do to determine how such a purchase might work out, he said, and more about how the process will move forward should be known after Wednesday’s hearing on Abengoa’s proposal.