Rebound in ethanol prices could give a boost to Abengoa plants in Ravenna, York

Source: By Russell Hubbard / Omaha World-Herald staff writer • Posted: Tuesday, June 14, 2016

The rebound in ethanol prices has put Abengoa’s previously shuttered ethanol plants in York and Ravenna, Nebraska, in position to fetch buyers. Meanwhile, Omaha’s Green Plains Inc. is bidding for two other Midwestern plants of the struggling company.

The plants, which will be sold at auction, have attracted bidders as part of Spain-based Abengoa’s debt-restructuring process in Europe and the United States. The company filed legal papers in bankruptcy court in Missouri on Sunday.

Abengoa put its U.S. ethanol plants in bankruptcy this year after a drop in prices for the corn-based motor fuel and other problems, including difficulty repaying $10 billion in corporate debt at the parent company that led to the massive restructuring of obligations. The restructuring includes the prospective sale of the Nebraska plants and others.

Documents filed in U.S. Bankruptcy Court in St. Louis say an affiliate of Kaapa Ethanol of Minden, Nebraska, bid $115 million in cash for the Ravenna plant, and BioUrja Trading of Houston has offered $35 million in cash for the York plant. Attempts to reach officials with Kaapa were unsuccessful Monday.

Omaha’s Green Plains has bid $200 million for Abengoa plants in Madison, Illinois, and Mt. Vernon, Indiana, Chief Executive Todd Becker told The World-Herald.

“We continue to look to add to our portfolio,” Becker said.

Green Plains operates 14 ethanol plants nationwide, producing about one billion gallons of the motor fuel a year. “These plants fit well … as we want to get to two billion gallons a year.”

The Ravenna and York plants were shuttered last year as ethanol prices reached multi-year lows due to high production and strong inventories.

Last week, ethanol prices hit a six-month high on robust exports and low gas prices that coincided with the summer driving season.

As ethanol prices have rebounded, Abengoa recently restarted the plants and has been operating them with loans obtained with court permission during the U.S. bankruptcy proceedings.

“We don’t know what the results will be,” Becker said of the Illinois and Indiana plants, noting other bidders are sure to show before the August deadline. “There are definitely a lot of people looking at these things.”

The York and Ravenna plants, which Green Plains has not bid upon, are themselves subject to additional bids by others and are still prospects for Green Plains, Becker said.

Green Plains had profit of $7 million last year on revenue of $3 billion. It is in a highly cyclical business whose inputs include the price of corn, the main ingredient in U.S. ethanol; the price of gasoline, with which it is blended under federal law; and driving patterns. In 2014, profit was $160 million on $3.2 billion of sales.

The company is on Fortune Magazine’s list of the 1,000 largest in the United States.

Shares of Green Plains, which have risen 43 percent in the past four months on higher ethanol margins, fell 3.7 percent, or 70 cents, to close in New York Stock Exchange trading at $18.24 each on Monday.