Renova Energy’s stalled ethanol project in Heyburn, Idaho, has reached a temporary agreement with bankers to stall foreclosure proceedings while developers scramble to find additional capital.
Work on the 21 MMgy plant stopped in early January when cost overruns plagued construction and caused trading of its London-based parent company’s shares to be suspended for three weeks in December.
The refinery’s anaerobic digester, which was to power the plant with methane generated from the decomposition of organic matter, was within weeks of completion when construction stopped. Work on the ethanol plant was still in the early stages in January. Renova announced in early February that it’s attempting to raise an additional $13.5 million to complete the project, which has cost $45 million to date. Lenders have given Renova until April 2 to secure the needed financing.
“I can’t comment on the fundraising [because] it’s all being done out of London banks,” said Jim Glancey, senior vice president of Renova in Idaho. He said it’s a positive sign that investment bank Lazard Middle Market, a New York firm, has agreed to advise Renova through the fundraising process.
Glancey said Renova’s chief financial officer flew into Idaho from London earlier this month to assess the situation, and senior Renova management will visit the state this week to discuss the fundraising efforts. Renova said it’s soliciting funds from existing investors and seeking new lenders, while also exploring whether it will sell Renova shares to liquidate some of the company’s equity. However, that may be a tall order. Renova’s stock value has fallen since trading resumed in late December, and plunged another 14 percent after the announcement that it was facing the financial deadline.
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In September 2006, Renova announced it was leasing the Heyburn site, which formerly housed a J.R. Simplot facility that made ethanol out of potato waste. The company planned to convert the plant to a dry-grind facility using corn as a feedstock. The anaerobic digester was designed to make the plant self-sufficient in heat and power generation.
