Abengoa Reports Troubles

Biofuels Company Seeks Creditor Protection

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Abengoa operates a commercial-scale cellulosic ethanol plant designed to use wheat straw and switchgrass among other feedstocks in Hugoton, Kansas. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- Spanish renewable energy company Abengoa Bioenergy SA has filed for protection from its creditors, the company said on Wednesday. It's unclear what that might mean for the company's corn-based and cellulosic ethanol plants in the United States.

Dow Jones news service reported Abengoa is filing for preliminary protection from its creditors, which could be a prelude to filing bankruptcy.

DTN's attempts to reach officials with the company were unsuccessful Wednesday.

Abengoa is one of a handful of companies launching commercial-scale cellulosic ethanol production in the United States during the past 18 months. Earlier this year, the company began production at a plant designed to use wheat straw and switchgrass among other feedstocks in Hugoton, Kansas.

As questions have arisen about the future of the Renewable Fuel Standard, Christopher Standlee, executive vice president of global affairs for Abengoa Bioenergy, has been front and center in warning federal lawmakers and the Obama administration that the company already was making plans to build future cellulosic ethanol plants abroad.

DTN's attempts to reach Standlee were unsuccessful. DTN's attempts to contact ethanol plants as well as officials at the company's headquarters in the St. Louis area were also unsuccessful.

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Abengoa operates ethanol plants in Portales, New Mexico; Colwich, Kansas; Granite City and Mount Vernon, Illinois; as well as Ravenna and York, Nebraska. In addition to the Hugoton cellulosic ethanol plant, the company operates a pilot-scale biomass plant in York, Nebraska.

Including the Hugoton biomass plant, Abengoa has a biofuel production capacity of more than 370 million gallons per year, making it one of the largest producers in the United States.

Abengoa is one of the world's top builders of power lines in Latin America and a top engineering and construction business, as well as building renewable-energy power plants from Kansas to the U.K. The company reportedly filed for protection from creditors after a Spanish investment firm called off plans to provide the company with a cash injection.

In a filing with the U.S. Securities Exchange Commission Wednesday, the company indicated it was struggling to remain financially viable.

"...The company announces that it has received notice from Gonvarri (potential Abengoa investor) that the framework agreement is terminated considering that the conditions to which that agreement was subject have not been satisfied," Abengoa said in the SEC filing.

"The company will continue negotiations with its creditors with the objective of reaching an agreement that ensures the company's financial viability..."

According to a report by Dow Jones, financial analysts in Madrid, Spain, continued to question the company's future.

"Investing now in Abengoa can only be recommended for those with high risk tolerance," Renta 4 Banco analysts in Madrid wrote in a research note.

According to Spanish law, Abengoa has up to four months to continue talks with creditors. In addition, creditors are not allowed to force bankruptcy proceedings in the meantime.

The decision by investment firm Gonvarri to back out of its plan to inject funds into Abengoa is the latest blow to the company, according to Dow Jones, which has been desperately trying to raise funds for several months amid snowballing concerns among investors and analysts about its solvency.

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

Follow him on Twitter @ToddNeeleyDTN

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Todd Neeley

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