Oh, They’re Good for It

Ethanol Producer Magazine's September issue, which has a project finance theme, features stories about shareholder liquidity, lenders and a North Dakota project to build a corn-ethanol plant largely financed by foreign investors, writes Tom Bryan.
By Tom Bryan | August 20, 2014

In June, I moderated a panel on ethanol plant capital planning and shareholder liquidity at the International Fuel Ethanol Workshop & Expo. The speakers explained the actions ethanol plant boards can take to maximize plant value, boost shareholder confidence and achieve uninterrupted liquidity. Ethanol Producer Magazine Managing Editor Holly Jessen was in the room and listening intently. Her notes became the basis for this month’s feature, “Looking for Liquidity,” one of three pieces on finance in this issue.

Jessen reports that the everyday Americans who own ethanol plant shares have the same hopes as other investors: They put money into a business with an expectation of a return. Regardless of margins, there are always some shareholders who want, or need, to cash out. The ability to grant those exit requests—to pay out when asked—is liquidity. Fortunately, there are companies like FNC AgStock LLC and AgStockTrade.com that make liquidity easier through online listings of ethanol plant shares that are for sale. If you’re on the board of an LLC or any other nonstock-exchange listed ethanol plant, give this story a look.               

It’s been a while since we’ve looked at banking. Truth is, there hasn’t been a lot of lending activity in our space since the downturn. Sometimes, however, a nonstory ends up being a good read. That’s the case with our feature, “Banking on Biofuels,” a long-awaited catch up with the Farm Credit System lenders who helped facilitate our industry’s first build out. EPM Staff Writer Katie Fletcher jumps into the story with a simple question: With ethanol plants experiencing super-strong margins, are lenders lending? The answer is curious (hint: they never really stopped). Lenders are, in fact, engaged with the ethanol industry and actively looking at the capital projects that producers with strong balance sheets are bringing them. However, just because lenders are reengaged with ethanol doesn’t mean they’re willing to finance cellulosic projects. “We like to be on the leading edge, but not the bleeding edge,” one banker tells us, underpinning the need to get one big next-gen plant up and running.  
    
The last feature in this month’s lineup is our cover story. It’s an insightful piece accompanied by great photos. EPM Senior Editor Susanne Retka Schill shares the inside story on North Dakota’s 65 MMgy Dakota Spirit AgEnergy LLC project in the town of Spiritwood. The story is interesting for three reasons. First, it’s the only U.S. ethanol plant to be built in nearly seven years. We explain why. Second, it is the first plant in the nation fully integrated with a coal-fired combined heat and power facility. And third, its construction was financed largely by foreign investors, which is remarkable. 

Two big takeaways this month: The U.S. ethanol industry is finding ways to get projects done, through both traditional and alternative investment routes. And, because producers are in great financial shape, the lenders who enabled them to break ground seven to 10 years ago are circling back to support the capital expenditures of ethanol’s new era.

Author: Tom Bryan
President & Editor in Chief
tbryan@bbiinternational.com