Abengoa Files Chapter 11 in US

OMAHA (DTN) -- Farmers and grain companies doing business with Abengoa Bioenergy ethanol plants -- or any other ethanol plant in Nebraska -- have no legal protection when ethanol companies go belly up.

As a result of Spain-based Abengoa SA's financial trouble and imminent company restructuring, Abengoa Bioenergy, the company that operates ethanol plants in Nebraska and several other states in the U.S., filed a petition for Chapter 11 bankruptcy protection in federal bankruptcy court in Missouri on Wednesday.

Included in the petition is a list of the top 50 unsecured creditors -- virtually all large lending institutions, government entities and grain companies in Europe and the United States.

Nowhere on that list are the names of farmers who supply grain for ethanol, largely because Abengoa's ethanol plants in Ravenna and York, Nebraska, have sourced the vast majority of their corn feedstocks from larger suppliers including farmer cooperatives.

John Fecht, grain department director at the Nebraska Public Service Commission, said farmers and grain companies that do business with ethanol plants in Nebraska do so at their own risk. Grain elevators are licensed and bonded with the PSC but ethanol plants are not.

"Nebraska law does not require anyone who buys grain for their own use to be licensed as a grain dealer and, therefore, they had no license and no bond," he said.

"They buy lots of corn but only sell ethanol and the byproducts it creates in the process. They are exempt. There is no recovery option for any farmer or commercial operation through the Public Service Commission."

Kelly Brunkhorst, executive director of the Nebraska Corn Board, said that, to this point, he has heard nothing about individual farmers who supply grain suffering losses. Many producers sell grain to grain companies that then sell to ethanol plants.

"The biggest concern I do hear is the loss of a market at a time when we need the demand," he said.

Roger Berry, director of market development for the Nebraska Corn Board, said, so far, farmers are mum.

"I have not had any individual farmers telling me that they are owed money for grain delivery in regards to either Abengoa facility," he said.

A 178-page creditor's matrix filed with the court Wednesday by Abengoa, however, shows there are many hundreds of outstanding unsecured creditors. An evaluation of the list by DTN found there are at least 226 farms, agribusinesses and ethanol-related companies across the country listed as creditors.

The total amount owed to the creditors on the list is unknown. The list only includes the names and addresses of creditors, including the names of companies and others also listed in the top 50 unsecured creditors list on Abengoa's petition.

In the past several months, a number of grain companies have filed involuntary Chapter 7 bankruptcy petitions against Abengoa in U.S. bankruptcy court in Nebraska and Kansas. They claim Abengoa Bioenergy has not paid for some $10 million in grain deliveries to ethanol plants mainly in Nebraska.

Among the top 50 unsecured creditors, companies that supply grain to Abengoa and government entities connected to rural America altogether claim about $15.1 million in losses from doing business with Abengoa, according to the petition for Chapter 11. Abengoa lists between $1 billion and $10 billion in both assets and liabilities.

Grain companies listed by Abengoa as unsecured creditors include CHS, Inc.; Gavilon Grain in Omaha; The Andersons Inc. in Kearney, Nebraska; Central Valley Ag Cooperative in York, Nebraska; Farmers Cooperative in Dorchester, Nebraska; Interstate Commodities Inc. in Troy, New York; and Farmers Co-op Association of Ravenna in Ravenna, Nebraska. Pacific Ag, a company Abengoa contracts with to provide feedstocks to the cellulosic ethanol plant in Hugoton, Kansas, is also listed among the creditors.

John Williams, a spokesman for Pacific Ag, said his company continues to work with farmers in the Hugoton area, although the Hugoton plant is closed.

"Pacific Ag entered into separate contracts with growers," he said. "Pacific Ag is still working with growers in the region to supply feedlots and dairies, markets that are much larger than the Abengoa facility. Pacific Ag is just starting to reach out and market to these new industries.

"The company believes that, between the feed and the bioenergy opportunities, there will be no shortage of demand for residue/biomass in the region, and Pacific Ag is committed to the High Plains and its grower customers."

Other companies in rural America also included on the list of unsecured creditors are Cargill Trade and Structured Finance in Minnesota; Cargill Americas Inc. in Florida; Encore Energy Services Inc., a natural gas supplier in Omaha; Buffalo County Treasurer in Kearney, Nebraska; and the York County Treasurer in York, Nebraska.

However, the money owed to the top 13 unsecured creditors listed by Abengoa -- all of them banks and other lending institutions -- dwarfs the losses in rural America. According to the filing, Abengoa owes some $5.8 billion in loans to the top 13 institutions, mostly located in Europe.

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Editor's note: Divisions of DTN's parent company, Schneider Electric, are among the creditors listed by Abengoa.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @ToddNeeleyDTN

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