‘Active acquirers’ interested in Abengoa plants

Source: By Holly Jessen, Kassidi Andres , Ethanol Producer Magazine • Posted: Thursday, March 3, 2016

Long before there was an official announcement, interested buyers started calling up management at Abengoa Bioenergy and touring the company’s first generation ethanol plant assets.

“The long and the short of it is there are a variety of the most active acquirers that have already been in and out of the data room and have spent some time thinking about which assets they are interesting in, long before the announcement was made that there would be a sale process,” Mark Fisler, managing director of Ocean Park Advisors, told Ethanol Producer Magazine.

Currently, of Abengoa’s six first generation plants in the U.S, only the plants located in Mt. Vernon, Indiana, and Madison, Illinois, (also known as the Granite City plant) are in operation. These are the same two plants, along with the cellulosic ethanol plant in Hugoton, Kansas, which are not part of the Chapter 11 bankruptcy filing. EPM obtained information about which plants were in operation by checking with economic development and city government officials in the cities Abengoa plants are located in and confirmed it with Chris Standlee, executive vice president of global affairs for Abengoa Bioenergy.

The plants in Colwich, Kansas, and Portales, New Mexico, are not in operation and the employees have been laid off. Standlee added that those facilities “have not been continuously operated over the past several years, and were considered more ‘peak’ plants to be run in times of good margins.” On the other hand, the two Nebraska plants, located in York and Ravenna, are not in operation but employees are still reporting to work. “Depending on court approval, we hope to be able to restart the Ravenna and the York plants, and at this time we don’t expect the bankruptcy filings to have any immediate impact on employment,” he added.

When Abengoa management first started getting calls from interested buyers, the company was open to those discussions, Fisler said, speaking to EPM in general terms based on the company’s industry knowledge and relationships with key players. However, in the beginning it was unclear whether there would be one buyer for all its global assets or if there would be separate sale processes in Europe, Brazil and the U.S. In the end, that second option is what is likely to happen.

That’s not ruling out the notion that a single buyer could come to the table, but I think it’s recognition that it is more likely that, not only will the sales be done on a country by country basis (I think in the case of Europe it would be the entire region) but as well, I think they’re open to, I’ll call it a menu approach,” he said, adding that buyers may be interested in one or two facilities. “So I think they’re recognizing that optionality may, in the end, yield a better result and better recovery of value for Abengoa.”

Fisler added that, in the U.S., the plants that are most likely to be sold quickly are the larger and newer facilities, in Madison, Mt. Vernon and Ravenna. “I think after that when you are looking at York, Colwich and New Mexico in that order,” he said. “I think Colwich and New Mexico being smaller scale more on the fringe of the Corn Belt would be tougher assets. But it’s not to say that there might not be an interested party for those two as well.”

Fisler also alluded to which companies may be interested in purchasing U.S. Abengoa plants “You can look at the geography of existing players and that will tell you the likely candidates for the acquisition of some of these assets,” he said.