Renova Energy files for Chapter 11 bankruptcy protection

By Bryan Sims | June 02, 2008
Web exclusive posted June 30, 2008 at 12:05 p.m. CST

London-based ethanol producer Renova Energy PLC has secured $4 million of working capital facilities from its lenders and also voluntarily filed for Chapter 11 bankruptcy protection for its U.S. subsidiaries to protect itself from creditors as part of its plan to move forward with its financing restructuring process.

Renova said the new working capital facility does not extend to funding its parent company Renova Energy Plc. In the absence of this new funding, Renova Energy has limited financial resources to continue operating. In a statement, the company said it needs more money; otherwise it may go out of business.

Renova Energy of Idaho LLC, Renova Energy's U.S.-based subsidiary, suspended construction on its 20 MMgy ethanol plant in Heyburn, Idaho, late last year, citing cost overruns for its financial downturn after the project's price tag rose to nearly $60 million, up from $45 million. The company said it's in talks with interested parties to sell the partially finished ethanol plant.

"It was very important that we secured additional working capital for our existing and growing business to provide reassurance to our customers and suppliers while discussions with our lenders are ongoing," said Renova Chairman Chris Thomas.

Despite Renova's financial troubles, the company's existing business continues to grow and generate positive cash flow. In its first quarter ending March 31, approximately 14.2 million gallons of ethanol were sold at an average price of $2.30 per gallon. In the two months ending May 31, 3.9 million gallons of ethanol were sold at an average selling price of $2.81 per gallon. "This represents further annualized sales volume growth of over 60 percent since the year end," the company said.

To learn more about Renova, visit http://www.renova-energy.com/.