With Spanish energy giant’s bankruptcies, Gavilon, BNSF Railway, 2 Nebraska counties among creditors stiffed for $20M

Source: By Russell Hubbard, Omaha World-Herald staff writer • Posted: Tuesday, March 8, 2016


    The U.S. bankruptcies of Spanish energy giant Abengoa SA have left Nebraska strewn with stiffed grain sellers, jammed-up business partners and out-of-luck taxing authorities who are all out big time because of financial troubles far from the rural Midwest.

    All told, 11 Nebraska companies and governments and firms with large-scale operations in Nebraska that are among the largest creditors are owed almost $20 million by Abengoa, which operated ethanol plants in Ravenna and York that are now seeking bankruptcy protection as their Spanish parent company teeters on the brink of insolvency.

    The list of the largest creditors includes Omaha-grain seller Gavilon and BNSF Railway, along with York and Buffalo Counties, home to the bankrupt Abengoa ethanol plants in York and Ravenna, respectively.

    “We are very concerned,” said Andy Hoffmeister, deputy attorney for Buffalo County, population 48,000, which is listed in bankruptcy court documents as being owed $909,000.

    Hoffmeister said the county’s end amounts to a little more than half of the $909,000, with the rest related to lenders involved in the tax improvement district that includes the Abengoa plant.

    The plant, shuttered for several months, employed about 60 people in good-paying jobs, said Hoffmeister, who handles child-support collections for the county in addition to legal matters related to public revenue.

    “And we have noticed — believe me, we have noticed,” Hoffmeister said of delinquent child support since the plant shut down.

    Buffalo County is far from alone in being stiffed in Nebraska by Abengoa. The almost $20 million is detailed in the bankruptcy filings of Abengoa’s U.S. division in U.S. Bankruptcy Court in St. Louis and includes money owed in Nebraska to trade vendors such as BNSF, to county treasurers for taxes, and to farmer cooperatives for corn the company turned into ethanol.

    The groups owed the most money, according to the schedule of the 50 largest unsecured creditors filed by Abengoa Bioenergy U.S. Holding as part of its Chapter 11 bankruptcy filings, are the grain sellers.

    Tops on the list is Gavilon, a unit of Japan’s Marubeni, owed $3 million when its claims against both the Ravenna and York plants are added.

    The Lincoln branch of CHS Inc., a Minnesota-based grain seller and franchiser of Cenex gas stations, is owed $5 million, according to the filing.

    Meanwhile, the Spanish parent company Abengoa SA is contemplating what would be the largest bankruptcy in that nation’s history. The operator of ethanol and solar installations worldwide and an engineering and industrial construction business owes lenders about $10 billion, and is having trouble paying.

    Developments can move fast in a U.S. Chapter 11 bankruptcy, the kind in which a debtor seeks to continue operating as it reorganizes it debts. Late last week Abengoa got court approval to use about $8 million of the $41 million in bankruptcy loans it has secured from emergency lenders.

    The company said in response to inquiries by The World-Herald that it was pleased to receive bankruptcy court permission to tap emergency financing and “in order to stabilize the involved companies and allow them to operate pending further hearings on plans to restart one or both of Abengoa’s Nebraska ethanol plants.”

    James Powers — the Omaha-based McGrath North attorney for Nebraska grain sellers Gavilon, Ohio-based grain seller the Andersons, and Farmers Cooperative of Ravenna — said as much as $2 million of that may be headed to the Ravenna plant, to pay for salaries and other expenses needed to get it running again and to pay some taxes and licensing fees.

    “We would have far preferred that all of the funds generated by the lien on Ravenna’s assets go to just that location, but at least we were assured some are headed there,” Powers said of the amount allocated to the Ravenna plant and its claims.

    Powers also said it was the Nebraska creditors that started the entire process, filing an involuntary bankruptcy petition against the Ravenna plant last month; that liquidation action was converted by Abengoa last week into a Chapter 11 reorganization and amalgamated with the Missouri bankruptcies.

    Powers said his group of creditors — two national grain sellers and a small co-op — represent a novel combination that came together to assert their rights as creditors. While Gavilon is owed about $3 million, the Andersons is out $1.4 million in Nebraska, and Farmers Cooperative of Ravenna is due $362,000 when its Ravenna and York claims are combined.

    “It is a unique group,” Powers said, “united by the concern that the value of the Ravenna assets would be taken out of Nebraska.” Powers also represents ag co-ops in Dorchester and York.

    Other creditors connected to Nebraska that provided goods or services to Abengoa and what they say they are owed:

    » York County, population 14,000: $270,448. County Attorney Candace Dick said she is aware that some money is being released to Abengoa for taxes and fees, but doesn’t know how much, if any, is slated for her county.

    “We are keeping an eye on it,” Dick said.

    » Novozymes, the Denmark-
based company that operates a plant in Blair making enzymes used in ethanol production: $719,000. The company declined to comment on pending litigation.

    » Farmers Cooperative of Dorchester: $1 million. The co-op had sales of $833 million in 2013, the last year for which figures are available on its website.

    » Central Vally Ag Cooperative: $1.4 million. Telephone attempts to reach officials with the co-op, which had $1 billion in sales last year, were unsuccessful.

    » Omaha-based Encore Energy Services: $1.8 million. The company declined to comment, citing the pending nature of the litigation.

    » BNSF Railway: $2.4 million. The nation’s largest railroad by ton-miles is owned by Omaha’s Berkshire Hathaway. A spokeswoman had no comment on the matter. Berkshire Hathaway also owns this newspaper.

    As for the prospect of the plants running again and generating something — either ongoing cash flow or proceeds in a sale — they appear good, said Todd Sneller, administrator of the Nebraska Ethanol Board.

    “I have personally heard from four entities about interest in acquiring one of the plants, and I suspect the past practice of refiners acquiring what may be undervalued assets will pique interest,” Sneller said. “From a community perspective the plants are important sources of employment that generate demand for goods and services.”

    Of course, ethanol remains a big business in Nebraska, although a somewhat subdued one at the moment. The state is the second-largest producer, behind Iowa, with 25 plants, the idled Abengoa ones included. Nebraska is also the third-largest U.S. producer of the main feedstock for the motor fuel, corn.

    The entire ethanol industry is in a slow mode, however, with an oversupply of oil, gasoline, ethanol itself and other energy commodities depressing prices and leading to production cutbacks.

    Kelly Brunkhorst, executive director of the Nebraska Corn Board, said farmers haven’t been complaining about lack of payment for their grain, as with Abengoa. They are more worried, she said, about low demand and low corn prices hovering near $3.50 a bushel, about half of what they were in the summer of 2012.

    “That doesn’t mean that there is not concern,” Brunkhorst said. “But I believe in today’s economic downturn in the agricultural economy, their concern also is that the plants are closed and not grinding corn at a time when we have a large supply of it.”