Abengoa Plans to Restart Nebraska Plant

Creditors Told Company Won't Sell Assets

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Court documents indicate Abengoa has not paid for at least $9 million in outstanding corn deliveries to the company's ethanol plants. (DTN/The Progressive Farmer file photo)

OMAHA (DTN) -- Abengoa SA will not sell its assets or seek more secured debt to finance operations at an idled corn-ethanol plant in Ravenna, Nebraska, before creditors are made whole, an attorney for Abengoa Bioenergy of Nebraska assured a Nebraska bankruptcy court judge Wednesday during a hearing on an involuntary Chapter 7 bankruptcy petition.

Omaha-based Gavilon Grain, LLC; Ravenna, Nebraska-based Farmers Cooperative Association; and Maumee, Ohio-based The Andersons Inc., indicate in the petition that Abengoa owes about $4.1 million for grain purchased by its ethanol plants.

Abengoa Bioenergy's parent company, Abengoa SA based in Spain, recently announced plans to sell its ethanol plants in North America and Europe. That announcement essentially led the Nebraska plant's creditors to seek involuntary Chapter 7 bankruptcy proceedings.

So far, the parent company has indicated it plans to sell off a large portion of its business to stave off creditors who are owed some $8 billion. Abengoa has until the end of March to either file bankruptcy in Spain or announce a restructuring plan to the Spanish government.

Abengoa attorney Richard Chesley said during a court hearing Wednesday that the company intends to restart production at the Ravenna plant which has been idled for a few months.

"Our goal is to have this plant up and running as soon as possible," he said. "This isn't the only Abengoa entity that is in any type of U.S. proceeding. We have been in near-constant communication with a number of potential parties that we hope and expect will provide us the ability to have this facility up and running as quickly as we can obtain the liquidity that we need to do so.

"We will continue to work through this process, and we expect to be back to the court shortly with what we hope to be a much brighter outlook for this facility."

Attorney for the creditors James Niemeier said the Chapter 7 petition was filed because the creditors were fearful Abengoa would sell its ethanol plants in North America without paying what the company owes for corn deliveries.

"As of Monday, we have been negotiating a stipulation," Niemeier said. "The debtor has said it has not since the petition secured debt or sold assets and that in the gap period will not attempt to secure debt financing or sell its assets without filing a motion on notice so creditors will have a chance to protect themselves.

"We don't necessarily want to hamstring the debtor, and that's why we were willing to agree not to go the full route of the trustee at this point based on their assurances."

Leading up to the hearing, attorneys for the creditors had asked the court to appoint an interim trustee to organize creditors. As a result of negotiations, that will not occur for now.

Abengoa Bioenergy can contest the involuntary petition for Chapter 7. Chapter 7 is filed to liquidate assets to pay off creditors. In addition, CHS Inc. sued Abengoa in December, claiming the company had not paid nearly $5 million for some 2 million bushels of corn delivered to three different Abengoa ethanol plants in Nebraska and Kansas.

Attorneys for CHS Inc., the United States Trustee, the U.S. Department of Energy, Adams Grain Company in Nebraska and The Andersons Inc. in Ohio, were present for the hearing.

The creditors' original motion sought to limit Abengoa's power to sell its assets, obtain new secured loans, or to appoint an interim trustee. In bankruptcy cases, interim trustees are appointed to organize how assets are divided among creditors. Abengoa operates plants in Ravenna and York, Nebraska.

So far, court documents indicate Abengoa has not paid for at least $9 million in outstanding corn deliveries to the company's ethanol plants.

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

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Todd Neeley