Xethanol sells cellulosic sites

By Sarah Smith | March 10, 2008
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New York-based Xethanol Corp.'s recent announcements of buying and selling cellulosic sites, facilities and ventures have produced considerable industry buzzbut no ethanol.

In late January, the energy company scrapped plans to develop two cellulosic ethanol facilities in Georgia and North Carolina, and announced that it was losing money on its only operational corn-based ethanol plant in Iowa. It also received a $500,000 grant from the Florida Department of Agriculture and Commerce to produce cellulosic ethanol from orange peels, and invested in a Pennsylvania cogeneration ethanol plant.

What Xethanol hasn't announced, however, is financial viability. In its third quarter 2007 filing with the U.S. Securities Exchange Commission, it admitted no timeline for profitability and "a net loss of $18.1 million for the nine months ending Sept. 30, 2007." Shares of stock, once valued at around $15 in April 2006, are currently trading around 55 cents.

At its annual shareholder meeting in January, Xethanol announced that it would sell the Georgia site that it purchased two years ago with the intent to build a corn-based and cellulosic ethanol refinery there. Xethanol's SEC filing for that day also indicated that plans for a similar facility in Spring Hope, N.C., would be scrapped to save additional money. The company's corn-based plant in "Blairstown, Iowa, is running at approximately 5.6 [MMgy] and is operating at a loss," the shareholder report stated.

While the company noted that corn-based ethanol may not be economically viable anymore, it then acquired a stake in Consus Ethanol LLC, a corn-based ethanol plant in Pittsburgh.

Xethanol announced in late 2007 that a class-action lawsuit was settled over alleged misrepresentations of company performance that boosted stock values. The complaint alleged that "Xethanol repeatedly assured investors that it could sustain itself on revenue from corn ethanol production while successfully commercializing biomass ethanol production. It appears that it does not have the ability to commercialize biomass ethanol in the foreseeable near-term."

A shareholder suit alleging stock fraud, misrepresentation and improper inducements to purchase common shares at artificially inflated prices is still pending.