Web Date: December 7, 2015
Debt Woes Idle Cellulosic Ethanol Plant
One of only three cellulosic ethanol plants in the U.S. has been idled after a little more than a year of operation. The facility, in Hugoton, Kan., is owned by the Spanish firm Abengoa, which is in talks with its creditors to avoid a bankruptcy filing in its home country.
Abengoa designs and builds renewable energy projects such as ethanol plants and solar installations; it does business via almost 900 subsidiary companies. The facilities are generally debt-financed. In cases in which the project is owned by Abengoa, it uses earnings from long-term supply contracts to repay debts. It can also sell the project.
But Abengoa has been struggling to make payments on nearly $10 billion in debt. Earlier this month, it reported that a plan for a large injection of equity from investor Gonvarri Corporacion Financiera had fallen through. The boost was intended to help Abengoa raise money through a public stock offering.
The Hugoton plant was idled earlier this month to address operating issues and was expected to restart in the spring, according to Neal Gillespie, director of the Stevens County Economic Development Board. But after the announcement that Abengoa may seek bankruptcy protection, all but six local plant employees were laid off, Gillespie says.
The plant’s opening ceremony in October 2014 was attended by Secretary of Energy Ernest Moniz, Kansas Gov. Sam Brownback, and other luminaries. The plant, which turns bales of corn leaves, stems, and cobs into ethanol, received a $132 million loan guarantee from the Department of Energy and a $97 million grant from the agency. The loan was repaid in March, DOE reports.
Poet-DSM opened the first U.S. cellulosic ethanol plant in Iowa a month before the Abengoa opening. DuPont opened a similar plant, also in Iowa, last month.
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